Chewy stock whipsaws after Roaring Kitty discloses a $245 million stake

• Chewy shares opened 9% higher before reversing lower after Keith Gill disclosed a big stake.
• The investor known as "Roaring Kitty" investor is company's third-largest shareholder, a new filing shows.
• Last week Gill spurred a brief rally in Chewy by posting an image of a dog on his X account.

Shares in the online pet retailer Chewy opened 9% higher on Monday before reversing lower after famed meme-stock trader Keith Gill unveiled a multi-million-dollar stake.

The stock fell as much as 7% at intraday lows, and had declined 6% as of 12:56 p.m. in New York.

The investor, best known as "Roaring Kitty" on social media, disclosed a 6.6% stake in the firm, according to a US Securities and Exchange Commission filing. The document shows he owns just over 9 million Class A shares, worth $245 million as of Friday's closing price. Gill is now one of the company's top five largest shareholders.

The disclosure officially cements Chewy as a meme stock, given that frenetic buying around Gill's actions ignores the firm's fundamentals, Mizuho Securities said in a note.

"CHWY shares are now trading at the upper end of recent valuation parameters (>20x EV/EBITDA), despite evidence of a clear turn in underlying fundamental trends and a return to sustainable active customer growth," the firm wrote on Monday.

It suggested using the recent surge as an exit strategy.

The volatile trading in Chewy follows a gain of as much as 34% last Thursday after Gill posted a captionless dog graphic on his X account. The stock ultimately closed 0.3% lower for the session.

Gill is famous for sparking the 2021 GameStop meme rally, a trade he revived in May with a post of a person playing video games.

While that's sent the social media-favored retailer spiking 180% in past months, it's also placed Gill in hot water. On Friday, the investor was sued in a proposed class action lawsuit for allegedly leading a "pump and dump" scheme for his own gains, Bloomberg reports.

As of mid-June, he held over 9 million shares in GameStop.

In Monday's SEC filing, Gill also marked down that "I am not a cat." The line references a statement he made during congressional hearings in 2021, during GameStop's previous record frenzy.