Keith Gill, aka Roaring Kitty, has made a significant investment move by acquiring 9 million shares of Chewy Inc. This comes as he faces a class-action lawsuit related to his involvement in the GameStop stock rally of 2021.
Will the lawsuit against Keith Gill for securities fraud have merit? Let’s find out.
Significant Investment in Chewy Inc.
Gill’s latest acquisition of Chewy Inc. shares, valued at $245.18 million, represents a 6.6% stake in the company. This purchase has made Gill one of the largest shareholders in Chewy, a prominent pet products retailer listed on the New York Stock Exchange.
The SEC 13G filing revealed that Gill had acquired a total of 9.01 million CHWY shares. This caused a notable 22% surge in Chewy’s shares during premarket trading. This acquisition worth over $245 million places Roaring Kitty as one of the largest shareholders in the company. This development follows after Keith Gill posted a mysterious image of a dog on his social media profile, hinting at his future investment strategy. While Chewy’s shares soared, GME stock faced a 5% decline in pre-market trading on Monday.
Gill in Legal Soup with GameStop Connection
While Gill’s investment in Chewy has been successful, he is facing legal problems with GameStop. The complaint filed on June 28, intends to sue Gill for orchestrating a ‘pump-and-dump’ scheme with a series of social media posts beginning May 13. The plaintiffs claim that Gill’s posts misled his followers, resulting in financial losses for many investors.
Former prosecutor Eric Rosen doubts the lawsuit’s success, citing the challenge in proving allegations against Gill, since social media activity is not enough to prove him guilty. The lawsuit claims that Gill did not properly disclose his transactions involving GameStop options calls, which allegedly deceived his supporters and led to financial losses for certain investors. Plaintiff Martin Radev, represented by the Pomerantz law firm, claimed that he suffered losses due to the alleged scheme, having bought 25 GameStop shares and three call options, which later dropped in value significantly.
Market Reactions
In response to the legal challenges, GameStop’s stock price has continued to decline. At press time, GameStop stock plunged 6.89% to $22.99 in Monday’s pre-market session. Earlier, last week, the GME stock closed at $24.69, marking a 1.59% drop on Friday, June 28. However, Chewy’s shares rise as much as 29% in premarket trading.
Despite the ongoing lawsuit, Gill’s investment may draw increased attention to Chewy from investors, potentially reflecting a strategic move as the company focuses on market expansion.
