Meme stocks pare gains with highly shorted Krispy Kreme, GoPro joining the frenzy
Individual investors have betting on riskier pockets of the market, including cryptocurrencies and lower priced consumer-facing stocks, as the broader equity market soars to record highs on hopes for a resilient economy and easing trade tensions.
Shares of doughnut chain Krispy Kreme, whose nearly 32% of free float have been shorted, sharply pared earlier gains and were last up nearly 2% at $4.17 versus their $5.73 session high. The stock had rallied nearly 27% on Tuesday and trading volume for both days has been usually high. On Wednesday about 134 million shares had changed hands up from 44 million in the prior session. The stock was among the most active tickers on Stocktwits, a retail investor-focused social media platform.
Action camera maker GoPro's shares were up about 17% at $1.61 after earlier hitting their highest level since late March 2025. Plant-based meat company Beyond Meat (BYND.O), opens new tab was up 2.75% after earlier hitting their highest level since Dec 4.
The broader market environment, with strength in technology and cryptocurrency sectors, "has encouraged a risk-on mindset, emboldening retail traders to dive into speculative plays," wrote Daniela Sabin Hathorn, senior market analyst at Capital.com. She added that "the risks are just as stark as the rewards."
"These surges are often disconnected from company fundamentals and can reverse violently. Traders who chase momentum without an exit strategy may be caught in painful drawdowns," said Sabin Hathorn nothing that meme rallies tend to be "spectacular on the way up, and just as quick to unravel."
The current momentum revived memories of the Reddit-driven meme stock frenzy of 2021 when amateur investors pushed up shares of video-game retailer GameStop (GME.N), opens new tab and cinema chain AMC (AMC.N), opens new tab, burning hedge funds that were on the other side of the trade.
Opendoor Technologies (OPEN.O), opens new tab, an e-commerce platform for residential real estate, was among the first stocks to join the current meme wave. But while it is still up more than 300% for the month so far, it is down more than 23% on the day at $2.20, a far cry from its July high of $4.97.
Some market participants attributed the Opendoor rally to X.com posts last week by EMJ Capital portfolio manager Eric Jackson, who said his hedge fund took a position in Opendoor and projected that it would hit $82 in the longer term.
EMJ Capital did not immediately respond to a Reuters request for more details on their position in the company.
Jake Dollarhide, CEO of Longbow Asset Management, said just like Ryan Cohen got the meme stock trade started in 2020 with GameStop (GME.N), opens new tab, the same scenario has played out with EMJ Capital and Opendoor.
Social media platform Reddit's r/WallStreetBets, the 40th largest subreddit with 19 million members, was abuzz with screenshots of bullish bets on Opendoor and Kohl's by amateur traders.
"Alright degenerates, we need to talk. OPEN ripped. KSS followed. But these cycles always come in threes, and we're missing the final piece. I think it's DNUT," a Reddit user with the handle Enodios posted on the subreddit.
Kohl's (KSS.N), opens new tab surged 37.6% on Tuesday with the highest daily inflow from mom-and-pop traders in about three years, Vanda Research data showed. But on Wednesday it appeared to exemplify the fickle nature of meme stocks with a 16% decline on the day.
Online gifts retailer 1-800-Flowers.Com (FLWS.O), opens new tab, with a short interest on 71.66% of its free float, was up 7.8% after rising almost 27% earlier in the day. Moves in Beyond Meat and 1-800-Flowers.Com were most susceptible to a short squeeze, Ortex said.
A short squeeze occurs when investors who had sold borrowed shares in the hopes of making money from a share price decline are forced to buy shares to close their losing positions.
"With both stocks moving higher in premarket, the probability of that dynamic kicking in is rising, especially for BYND, where borrow demand is already high," Ortex's Peter Hillerberg said.
About a quarter of total U.S. stock market orders are attributable to retail traders, J.P.Morgan data showed.
Another notable mover without news announcements this week was Pineapple Financial , last up 68% at $5.88 with 24 million shares changing hands versus the previous session's volume of less than 1 million shares. It hit a session high of $9.53 earlier on Wednesday.
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