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Business Insider
4 hours ago
- Business
- Business Insider
The latest meme stock mania is being driven by a historic short-squeeze that raises the risk of a downturn, Goldman warns
Bullish exuberance among retail traders drove a new meme stock rally this week. According to Goldman Sachs, it's just the latest episode in "one of the sharpest short squeezes on record." And while it's got room to run, it also raises the risk of a downturn, the bank said. Analysts said this week's rally in meme stocks, which saw companies like Opendoor, Kohl's, and other so-called DORKs surge, is part of a historic short-squeeze that recalls similarly bullish moments like 2000 and 2021. The bank said that heavily shorted stocks beloved by retail traders have trounced the broader market in the last few months. A basket of stocks popular with the retail crowd and another basket that tracks the most-shorted stocks have been up 50% and 60%, respectively, since April, compared to 28% for the broader S&P 500. Goldman Sachs' Speculative Trading Indicator — a gauge for how much trading activity is attributed to unprofitable stocks, penny stocks, or stocks with high valuations — spiked to its highest level since around 2021. When the gauge shows a sharp increase over a three-month period, stocks have typically outperformed for the following twelve months. However, the bank warned that the music eventually stops, and such wild bursts of euphoric trading actually raise the risk of a decline. "The recent rise in speculative trading activity signals near-term upside risk for the broad equity market but also increases the risk of an eventual downturn," the analysts wrote. The meme stock rally this week has fanned concern among other market forecasters, though many say the broader market still appears healthy. Michael Brown, a senior research strategist at Pepperstone, told Business Insider that stocks are still being propped up by a resilient US economy, strong corporate earnings, and optimism over President Donald Trump's trade deals, though sentiment was approaching extreme levels. Art Hogan, the chief market strategist at B. Riley Wealth Management, said he didn't believe meme stocks were a symptom of a larger valuation problem in the market, calling the latest rally "more noise than it is a signal."
Business Insider
5 hours ago
- Business
- Business Insider
Here's ChatGPT's advice on how to spot the next meme stock
What makes a meme stock? ChatGPT has a couple of ideas. When shares of Opendoor Technologies, a little-known online real estate platform, unexpectedly started surging this month, a few other seemingly random names followed. The list of stocks included Krispy Kreme, Kohl's, and GoPro, disparate companies united only by their financial challenges and vaguely retro vibes. On the surface, meme stocks that go parabolic have little in common, but if you look under the hood, there are some similarities in their profiles. How to find the next meme stock? We asked ChatGPT Since the GameStop short squeeze of 2021, investors have been trying to spot the next meme stock before it starts its ascent to the moon. After seeing some investors bragging on Wall Street Bets about getting winning trading advice from ChatGPT, we decided to test the AI's knowledge of the market's speculative frenzy. (We will preface all of this by saying it's not real investment advice. ChatGPT is scouring the internet— including Wall Street Bets! — for wisdom on the subject.) The prompt was: "What's the best way to identify what could be the next meme stock?" After clarifying what a meme stock is, the chatbot responded that identifying one is "more of an art than a science." It then proceeded to lay out some more detailed criteria for investors to think about: High short interest (>20% float), Days-to-cover ≥5 The bot suggested Kohl's, Opendoor, and GoPro as examples of stocks with high interest from short sellers, naming and ShortInterestTracker as tools for assessment. Surge in social mentions (Reddit/Twitter) It highlighted the importance of noting sudden increases in a sock's mentions or upvotes on social media platforms such as X, Reddit and Discord, citing platforms including ApeWisdom and AltIndex. Unusual options activity (OI spikes) While discussing unusual options activity, it stated that "retail traders often pile into out-of-the-money (OTM) call options, creating gamma squeezes as market makers hedge by buying shares-fueling price surges." Meme narrative (pop‑culture, underdog story) ChatGPT highlighted the importance of a narrative, citing the David vs. Goliath mentality that drove the GameStop short squeeze or companies with products popular with retail investors, such as Krispy Kreme or AMC Entertainment, a fellow struggling meme stock. Wanting to test the AI's predictive abilities, we asked: "Based on this criteria, can you predict the next meme stock?" ChatGPT quickly named American Eagle Outfitters as its pick for the next meme stock based on its criteria, providing reasons it checks all four boxes. Per the bot: Social Media Momentum Its recent ad campaign starring Sydney Sweeney has ignited buzz across Reddit, X, and Stocktwits, pushing the stock up ~10% on the news. Short Interest & Squeeze Potential With ~13% of its float shorted, there's room for a squeeze if sentiment continues to climb. Options Flow Early reports suggest call option volume has ticked upward around recent campaign news. Narrative + Meme-Worthiness The Sydney Sweeney campaign taps into pop-culture, star power, and a viral storyline — all classic ingredients for meme stock fervor." Indeed, the fashion retailer's new ad campaign featuring Sweeney has made American Eagle a top trending stock across retail trading forums. While the stock is only up 11% for the week, the assessment shows that ChatGPT can spot trends as they're unfolding. Though it wasn't asked to, the chatbot added honorable mentions to what could be the next meme stock, including Krispy Kreme, GoPro, and Rocket Lab USA. It should be noted that these aren't great picks by the bot, as all of these stocks were already fading after surging earlier in the week. Meanwhile, RocketLab, though it has fairly high short interest, is not actually a meme stock. It is possible that ChatGPT confused it with Rocket Companies, which has much higher short interest and was among the meme shares to surge this week.
Yahoo
19 hours ago
- Business
- Yahoo
What the latest meme stock episode is telling us about the stock market
The market saw another burst of meme stock madness this week Market pros told BI the latest episode signals a few things about the broader stock market setup. Seemingly irrational exuberance doesn't portend a coming crash like the end of the 2021 meme stock boom. The DORKs are sending an important message about the stock market. That acronym refers to the latest handful of meme stocks sending retail trader forums abuzz this week, with companies like Opendoor, Kohl's, and Krispy Kreme rocketing higher in a rally reminiscent of the pandemic boom. The speculative frenzy, which took the DORKs higher over the course of Monday and Tuesday, appears to have tapered off. Opendoor, which soared 473% over the first three weeks of July, dropped more than 20% by the closing bell on Wednesday. Kohl's, which spiked as much as 87% on Tuesday, dropped 14%, while Krispy Kreme has fallen 27% from its peak. But market pros who watched the short-lived rally think the latest meme stock craze is saying two important things about the market. Here are their top takeaways. 1. Investors are overexuberant The latest infatuation with meme stocks is one of the clearest signs that investor sentiment is now approaching "euphoric levels," Michael brown, a senior research strategist at Pepperstone, told Business Insider. "This sort of speaks to sentiment being at something of an extreme in terms of optimism and in terms of greed because once again, we see traders or investors—whatever you want to call them—retail participants, basically ignoring any and all fundamentals of a stock," he told Business Insider in an interview. Many of the DORKs that ascended this week have been on shaky financial footing in recent quarters. Opendoor, which appeared to spark the broader meme stock rally last week, reported a 26% yearly revenue decline in 2024 and a net loss of $392 million, according to its latest annual results. GoPro, another meme stock that soared as much as 161% this week, reported a 20% yearly revenue decline and a net loss of $432 million last year. "It's in large part companies that are, if not broken, certainly disabled," Art Hogan, the chief market strategist at B. Riley Wealth Management, told BI. "Just think to yourself of the names that are popular over the course of this week and the last time you actually used them, right?" Extreme bullishness is also evident in retail traders' stock-buying spree this year. Retail investors purchased a net $155.3 billion worth of stocks through the first six months of the year, the most in at least the last 10 years, according to Vanda Research. Individual traders now look like they're moving toward a "full-blown 'Risk-On' position," Doug Ramsey, the chief investment officer at The Leuthold Group said. "As we noted a week ago, higher prices seem to bring out the buyers—not the other way around," Ramsey wrote. 2. It's not a signal of pain to come When sentiment hits extremes, there are often growing calls for a pullback to bring investors back down to earth. The 2021 meme stock craze was followed by a painful bear market in 2022, but investors shouldn't worry about that happening this time. Retail-driven speculative rallies like the one that sent the DORKs soaring this week are often short-lived bursts of euphoria that don't necessarily spell bad news for the market. Much of the optimism pushing the broader market to all-time highs lately has to do with strong company financials and robust economic data, Pepperstone's Brown said. Investors see three factors propping up stocks: Strong corporate earnings. Of the S&P 500 companies that have reporte results for the second quarter, 83% have beaten earnings estimates, according to the latest update from FactSet. Trade deals. President Donald Trump said he reached another round of trade agreements with Japan, the Philippines, and Indonesia this week. That's alleviating some of investors' fears about tariffs, which sent the S&P 500 plummeting in April. Strong economic data. Despite concerns earlier this year about a recession, the job market is holding up, and consumers are still spending. Mark Hackett, the chief market strategist at Nationwide, said much of the S&P 500's gain over the last 20 trading days had to do with fundamentals of the market strengthening. "The reappearance of meme stock dynamics — exemplified by this week's volatile action in Opendoor, Kohl's, and others — mirrors the speculative trading seen in 2021, but with key differences," Hackett said on Wednesday. "While this activity reflects rising risk appetite, it remains isolated and has yet to challenge the broader market's calm and steady tone." August and September are historically weak months for stocks, so it's possible the S&P 500 could see a near-term seasonal pullback, B. Riley's Hogan said, though he added that he doesn't see a larger problem brewing in the market. "While we're trading at all-time highs, it's not as though we're trading at all-time lofty valuations," Hogan said. "I think all of the speculative investing is more noise than it is signal about the overall health of the market." Read the original article on Business Insider Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
Fortune 500 retailer Kohl's gets meme stock treatment as shares double before falling back to earth
Kohl's has leapt into the spotlight as the newest meme stock phenomenon, experiencing a wild surge in its share price driven by retail investors coordinating on social media. Echoing the notorious GameStop and AMC frenzies of 2021, the department-store chain saw its shares more than double at the open on Tuesday, beginning at $10.52 and nearly doubling to about $20, before paring some gains to close up 38% at $14.34. The shares are up more than 50% over a five-day trading period. The dramatic rally in Kohl's stock was not triggered by any turnaround in the retailer's financials or corporate news. Instead, the momentum was fueled by a wave of social media excitement, particularly on Reddit's WallStreetBets and similar forums. 'It's all social media chatter,' Steve Sosnick of Interactive Brokers told Bloomberg. 'Remember that a highlight of the meme stock era was a dose of nostalgia for companies like GameStop and AMC. Social media chatter can become self-fulfilling.' Users spotlighted the company's extraordinarily high short interest—roughly 49% of its float, or 53 million shares—making it a prime target for a so-called short squeeze. This buying frenzy forced traders betting against the stock to cover their short positions, amplifying the upward pressure on share prices. Trading in Kohl's shares was briefly halted by the New York Stock Exchange, evoking memories of pandemic-era meme stock rallies, although trading halts are typical for various kinds of volatile activity. Even after the initial surge abated, Kohl's shares held on to double-digit gains, finishing the day far above Monday's close and drawing attention from both regulators and analysts. Fundamentals vs. fad: The disconnect Despite the dramatic price action, Kohl's has struggled operationally. Once a staple of American malls, Kohl's has faced a string of challenges, including consecutive quarters of falling same-store sales and shrinking net revenue. The Fortune 500 retailer recently ousted CEO Ashley Buchanan over conflicts of interest, marking Kohl's third CEO in as many years. Major banks have slashed price targets on the shares, with some analysts predicting fair value for the stock as low as $4 to $8, citing persistent weaknesses in store traffic, competition, and strategy. Also, the company recently trimmed its dividend amid attempts to shore up cash. Several ingredients made Kohl's enticing for meme stock traders, though. Beyond the high amount of short activity, the stock was perceived as a bargain by contrarian meme traders, having languished in single digits for months. The flurry of comments about Kohl's stock on Reddit includes many since-deleted comments. Analyst and industry reaction Wall Street skepticism has grown amid the frenzy. Most analysts maintain a cautious tone, noting there is little in the way of fundamental news to justify the move. Goldman Sachs and UBS both maintain price targets below $10, emphasizing concerns over the sustainability of the hype-driven rally. Jay Woods, a strategist at Freedom Capital Markets, offered a blunt assessment to Axios: 'Meme stocks are back … There's no apparent reason for the stock price to have surged this much.' Kohl's dramatic surge is part of a broader rebound in meme stock enthusiasm. Opendoor Technologies, another struggling firm, experienced a similar spike earlier in the week, suggesting the appetite for speculative group action remains alive among retail investors. The market's robust rally in 2025, combined with lingering high short interest in a handful of beaten-down names, has created fertile ground for rapid—and risky—run-ups. Kohl's entry into meme stock territory highlights the enduring influence of online communities in shaping financial markets. While some retail traders may score quick profits, history suggests such episodes of exuberance can quickly unwind, leaving latecomers nursing losses. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Newsweek
a day ago
- Business
- Newsweek
What Coldplay Kisscam Scandal Says About America's Leadership Crisis
Advocates for ideas and draws conclusions based on the interpretation of facts and data. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. America's so obsessed with its own hype it's forgotten how to think. AirPods blur the line between presence and absence, reducing opportunities for mindfulness. Social media crowns swagger over substance. And leadership? It's just a glossy headshot with a corner office. Then one grainy video—a CEO caught cuddling with his HR chief at a Coldplay concert—did what no politician, pundit, or X post ever could: it united a fractured nation in stunned, meme-fueled disbelief. The now-infamous Coldplay kiss-cam moment wasn't just a viral blooper. It was a mirror held up to an important problem: the staggering lack of self-awareness among many of today's leaders. Even more ironic? The woman in the photo wasn't just any executive—she was the company's Chief People Officer, the person tasked with guarding its culture and aligning talent around core values. It's hard to imagine a more striking disconnect between stated purpose and public perception. This isn't a sitcom. It's America in 2025, where blind spots don't just affect individual leaders—they fracture trust, corrode boardrooms, and deepen the divide between the powerful and everyone else. The examples keep piling up. Kohl's ousted its CEO after just four months when it was revealed he funneled millions to a vendor led by his undisclosed romantic partner. MillerKnoll's CEO sparked outrage when, during a virtual town hall, she told employees—who were being asked to forgo bonuses while she kept hers—to "leave pity city." BP's Bernard Looney, Norfolk Southern's Alan Shaw, and McDonald's Steve Easterbrook were all forced out over inappropriate relationships with subordinates. These aren't isolated missteps—they reveal a troubling pattern: leaders so cocooned in power and affirmation that they begin to believe they're invisible, untouchable, and exempt from the standards they set for others. Self-awareness isn't a soft skill; it's the spine of leadership. Yet psychologist Tasha Eurich found that 95 percent of people swear they're self-aware, while only 10–15 percent actually are. At Heidrick & Struggles, our analysis of 75,000-plus leadership assessments pin it at a measly 13 percent. That's not just a self-deception gap—it's a five-alarm fire. This crisis isn't just for C-suites; it's a cultural contagion. In a world of curated feeds and algorithmic applause, we're all dodging reality. Empathy tanks. Teams coddle egos. Innovation flatlines. Truth becomes the first casualty of a culture that prizes performance over presence. Power makes it worse. Climb the ladder, and feedback vanishes faster than a budget surplus. Leaders get trapped in the "CEO Bubble"—a cozy echo chamber of yes-people and flattery where pride festers and accountability is a dirty word. The result? A nation of self-awareness haves and have-nots, where the powerful delude themselves into thinking they're indispensable. NASHVILLE, TENNESSEE - JULY 22: Chris Martin of Coldplay performs at Nissan Stadium on July 22, 2025 in Nashville, Tennessee. NASHVILLE, TENNESSEE - JULY 22: Chris Martin of Coldplay performs at Nissan Stadium on July 22, 2025 in Nashville, of a blind spot as a scotoma—a dead zone in your vision. In driving, it's the patch that causes wrecks if you don't adjust your mirrors. My daughter, exasperated in driver's ed, once snapped, "Why do cars have blind spots? It's stupid!" She's right. Smart cars now have sensors to catch what we miss. Leadership needs the same: feedback, reflection, and a swift kick of humility to shrink the danger zone. Our digital age is a self-awareness assassin. Social media fuels narcissism, not reflection. Leaders chase likes instead of truth, curating personas while ignoring their impact. At Heidrick & Struggles, we see it daily: teams dodge hard conversations to "keep the peace," only to breed chaos. When organizations reward charm over candor, blind spots don't just grow—they metastasize. Here's the kicker: what you are aware of, you control. What you are unaware of controls you. Self-awareness isn't just about dodging scandals—it's about unleashing potential. It's the key to trust, resilience, and leading with guts instead of gloss. That video from the Coldplay concert didn't just roast one CEO and an HR chief—it exposed a nation fed up with leaders who can't see past their own egos. But it also lit a spark: a craving for authenticity, for leaders who aren't just Instagram-ready but battle-ready—grounded, present, and unafraid to face the mirror. From the 2008 financial meltdown to Silicon Valley Bank's collapse, blind spots don't just sink leaders—they crater economies. If no one dares tell the emperor he's naked, why would he check? But leaders who confront their flaws don't just dodge disaster—they spot trouble miles away. They're mindful of their strengths, honest about their limits, and—dare I say it—almost too aware to fail. This takes guts. Strengths like charisma or decisiveness can become liabilities without a leash. Leaders need external discipline—360 feedback, candid advisors—and internal rigor: daily self-checks. My AWARE framework lays it out: Alert to blind spots. Will to face flaws. Attentive to strengths. Reflect on risks and derailers. Exercise superpowers to lift others up. It's not easy in a world that fetishizes confidence and punishes vulnerability. But the payoff? Leaders who inspire trust, not snark. Who build trust and loyalty, not memes. That viral video wasn't just a gotcha—it was a warning shot. One CEO's lapse cost him his job, but the actual cost is ours: a culture where leaders sleepwalk into catastrophe. We don't need more rock-star CEOs. We need ones who know their flaws, own their impact, and lead with eyes wide open. America's begging for it. Will leaders finally look in the mirror—or keep posing for the next viral disaster? The irony of this Coldplay viral video surely can't be lost on us. The band's biggest hit, "Viva La Vida," opens with a haunting confession: "I used to rule the world. Seas would rise when I gave the word. Now in the morning I sleep alone... Sweep the streets I used to own." It's a fitting anthem for a generation of leaders undone not by enemies, but by their own blind spots. Les T. Csorba is a partner in the CEO and Board of Director Practice of Heidrick & Struggles and author of the forthcoming book, AWARE: The Power of Seeing Yourself Clearly – Diary of a Corporate Headhunter (August 2025). The views expressed in this article are the writer's own.
