A new generation of meme stocks had their moment this week.
Social media buzz about Kohl’s, the donut chain Krispy Kreme and the action camera maker GoPro, to name a few, sent those companies’ stock prices soaring and then falling again.
Analysts said retail investors haven’t generated this big of a frenzy since that Gamestop rally back in 2021.
So what’s got them feeling bold and making those risky bets?
It’s not a great time to be an American department store. Kohl’s is an especially troubled player in that sector.
“Its CEO was fired due to a scandal a couple months ago,” said David Swartz at Morningstar. “It’s just been a steady stream of terrible news for Kohl’s.”
Swartz was puzzled to see some recent buzz about Kohl’s on Reddit. He watched its stock price rise gradually at first.
“I didn’t expect that it would suddenly blow up like it did on this Tuesday,” said Swartz.
Day traders flooded into the stock, sending institutional investors who were betting against it scrambling to buy back shares they had dumped. Which sent prices soaring even higher.
“Up almost 40%,” Swartz said.
Rinse and repeat with the other oddball stocks the internet latched on to this week.
“This meme-ster thing only works in sort of a market gone crazy,” said Erik Gordon, a professor at the University of Michigan.
A market where everyday investors feel emboldened to take big risks. Like in 2021, when near-zero interest rates and COVID stimulus checks helped juice Gamestop’s rally.
This time Gordon said day traders are exuberant because President Trump’s tariffs so far aren’t tanking the economy the way we feared.
“It’s actually one of the many signs that we are in a probably pretty risky stock market,” Gordon said.
A risky market where stock prices could be overinflated and due for a slide. But Steve Sosnick with interactive brokers expects retail traders to keep making those risky bets until they stop panning out.
“If you’re continually throwing darts at a dart board and they keep coming up bullseye, of course you’re gonna keep throwing darts at that dart board,” said Sosnick.
In the past, some companies have been able to leverage their meme status into more capital, like the movie theater chain AMC.
So, did this week’s frenzy provide any lifelines?
“No, not really,” said Swartz.
Swartz said the spotlight was too short-lived to meaningfully turn things around for Kohls, or any of the other stocks du jour.