Stock Influencer Keith Gill Acquires 6.6% Stake in Chewy

Stock influencer Keith Gill, also known as “Roaring Kitty,” has made a surprising move by unveiling a 6.6% stake in Chewy. This investment, valued at approximately $245 million, is Gill’s first known venture beyond GameStop and has caused a stir among executives at the U.S. pet products company.

A key link between Gill’s investments in Chewy and GameStop is Ryan Cohen, the billionaire founder of Chewy, who is now the CEO of GameStop. Gill has previously expressed admiration for Cohen in his social media posts. Cohen founded Chewy and sold it in 2017.

Impact on GameStop and Chewy:

Gill’s involvement with GameStop in 2021 sent the company’s shares soaring through social media posts that attracted significant retail investment. After resurfacing online in May following a three-year hiatus, Gill’s activities continue influencing the market.

However, his investment in Chewy has raised concerns among the company’s top executives about potential volatility in the stock due to Gill’s influence over individual investors. Despite this, shares in Chewy initially rose as high as $30 on Monday but then reversed those gains in volatile trading, closing down 4.8% at $25.92.

Details of the Investment:

According to a filing with the Securities and Exchange Commission (SEC), Gill purchased 9 million shares of Chewy at the stock’s Friday closing price of $27.24. This acquisition makes him Chewy’s third-largest shareholder.

It remains unclear if Gill liquidated any GameStop holdings to fund the Chewy stake. As of June 13, Gill’s position in GameStop was 9 million shares, valued at approximately $262.1 million. GameStop’s shares dropped 6% on Monday but have gained 33% this year.

Regulatory and Market Reactions:

The SEC filing was necessary because Gill’s investment exceeded 5% of Chewy’s outstanding shares. The purchase was made on June 24, just days before Gill posted a picture of a puppy on social media platform X, briefly driving Chewy’s shares to a near one-year high and affecting shares in Petco and Wag.

GameStop investors filed a lawsuit against Gill on Friday, alleging a “pump-and-dump” scheme that caused them financial losses. Gill has denied these allegations, maintaining that he has been clear about his aggressive investment style being unsuitable for most people. The Massachusetts securities regulator is also probing Gill’s trading activities in GameStop.

Gill’s Unique Style and Influence:

Gill gained fame for his cat memes and energetic YouTube streams, often wearing a bright red pirate bandana, which attracted thousands of copycat bets on GameStop and significantly impacted hedge funds that had bet against the stock.

In his Monday SEC filing, Gill remained on-brand, including a section titled, “Check the appropriate box to designate whether you are a cat,” with “I am not a cat” checked.

Future Outlook:

Gill’s admiration for Cohen and strategic moves have significantly influenced GameStop and Chewy. While the exact reasons for Gill’s attraction to Chewy remain speculative, his investment has certainly brought attention to the company.

Chewy’s shares have risen 15% in 2024 but had declined over the previous three years as pet spending slowed post-pandemic. Trading volumes in Chewy stock options have been unusually high recently, with a significant focus on call options, indicating a bullish outlook among some investors.