Latest news with #Krispy Kreme
Yahoo
a day ago
- Business
- Yahoo
What makes a meme stock? Online enthusiasm for a beaten down company with doubtful prospects
NEW YORK (AP) — Investors occasionally scoop up shares of companies whose financial prospects appear dim. The consensus around such companies is that the shares should, if anything, fall further. But they suddenly get touted in online forums and take off for no fundamental reason. Wall Street has dubbed them 'meme stocks.' Here are some characteristics of meme stocks: Poor growth prospects Meme stock investors typically look for companies with poor financials that are unlikely to grow much in coming years. This could be due to a number of factors, such as an outdated business model or fierce competition. Examples: GameStop, the original meme stock, faced a changing gaming environment where online gaming essentially replaced the need for video-game rental stores. Kohl's, battered for years by growth of online shopping, is now facing an increasingly competitive retail market that includes traditional department stores like Macy's and big-box retailers like Walmart. Beaten down share price Meme stocks are cheap. That's often part of the big attraction for investors looking to turn a quick profit. The low price allows for easier entry. Examples: Krispy Kreme, known for its light and airy doughnuts, landed on Wall Street in 2021 at more than $19 per share. It sank below $3 last month. AMC Entertainment is a more extreme example. It was an $11 stock before the 2021 meme stock craze pushed it above $300. It's now trading at about $3 per share. Big bets on the price dropping further Big interest from short sellers often precedes a beaten down stock's transformation into a meme. Short sellers are essentially betting against the stock in an effort to turn a profit. They do this by borrowing shares from a broker, then selling those shares. When the price drops, they buy back the shares at the lower price, give the shares back to the broker and pocket the profit. Part of a meme stock's identity involves investors suddenly buying highly shorted stocks, which drives the price up. That forces short sellers to also start buying the stock to cover their losses, which is called a 'short squeeze'. That drives the stock price even higher and results in a meme stock rally that benefits the investors who bought shares at their low point. Hype Online buzz is usually the key source powering a meme stock and not any change in the company's fundamentals. The hype typically comes from forums and platforms such as Reddit or YouTube. Example: GameStop's entry to meme status started from a keyboard. Investor Keith Gill, better known as 'Roaring Kitty,' rallied other investors to join him in buying up thousands of GameStop shares, changing the trajectory of the stock. Volatility Investing in meme stocks takes nerve. Gains can evaporate as quickly as they came. Example: Opendoor Technologies. The beaten down online real estate company's stock was trading below $1 per share through early July, then surged to as much $3.21 in the middle of the month as hedge fund manager Eric Jackson touted the stock on X. The stock is still trading just above $2, but that means buyers at the height of its rally ultimately suffered a loss. Sign in to access your portfolio
Associated Press
a day ago
- Business
- Associated Press
What makes a meme stock? Online enthusiasm for a beaten down company with doubtful prospects
NEW YORK (AP) — Investors occasionally scoop up shares of companies whose financial prospects appear dim. The consensus around such companies is that the shares should, if anything, fall further. But they suddenly get touted in online forums and take off for no fundamental reason. Wall Street has dubbed them 'meme stocks.' Here are some characteristics of meme stocks: Poor growth prospects Meme stock investors typically look for companies with poor financials that are unlikely to grow much in coming years. This could be due to a number of factors, such as an outdated business model or fierce competition. Examples: GameStop, the original meme stock, faced a changing gaming environment where online gaming essentially replaced the need for video-game rental stores. Kohl's, battered for years by growth of online shopping, is now facing an increasingly competitive retail market that includes traditional department stores like Macy's and big-box retailers like Walmart. Beaten down share price Meme stocks are cheap. That's often part of the big attraction for investors looking to turn a quick profit. The low price allows for easier entry. Examples: Krispy Kreme, known for its light and airy doughnuts, landed on Wall Street in 2021 at more than $19 per share. It sank below $3 last month. AMC Entertainment is a more extreme example. It was an $11 stock before the 2021 meme stock craze pushed it above $300. It's now trading at about $3 per share. Big bets on the price dropping further Big interest from short sellers often precedes a beaten down stock's transformation into a meme. Short sellers are essentially betting against the stock in an effort to turn a profit. They do this by borrowing shares from a broker, then selling those shares. When the price drops, they buy back the shares at the lower price, give the shares back to the broker and pocket the profit. Part of a meme stock's identity involves investors suddenly buying highly shorted stocks, which drives the price up. That forces short sellers to also start buying the stock to cover their losses, which is called a 'short squeeze'. That drives the stock price even higher and results in a meme stock rally that benefits the investors who bought shares at their low point. Hype Online buzz is usually the key source powering a meme stock and not any change in the company's fundamentals. The hype typically comes from forums and platforms such as Reddit or YouTube. Example: GameStop's entry to meme status started from a keyboard. Investor Keith Gill, better known as 'Roaring Kitty,' rallied other investors to join him in buying up thousands of GameStop shares, changing the trajectory of the stock. Volatility Investing in meme stocks takes nerve. Gains can evaporate as quickly as they came. Example: Opendoor Technologies. The beaten down online real estate company's stock was trading below $1 per share through early July, then surged to as much $3.21 in the middle of the month as hedge fund manager Eric Jackson touted the stock on X. The stock is still trading just above $2, but that means buyers at the height of its rally ultimately suffered a loss.
Yahoo
6 days ago
- Business
- Yahoo
How meme stock mania is a 'sign of the times'
Retail investors are piling into high-volatility trades, from meme stocks to speculative plays. Stocktwits editor in chief and vice president of community Tom Bruni explains what the activity says about market sentiment and how companies like GoPro (GPRO) and Krispy Kreme (DNUT) can respond. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. Meme stocks, we're talking GoPro and Krispy Kreme. When you watch these moves, Tom, is it fun? Is it concerning? What do you make of it? Yeah, it's a bit of both. I think the, uh, it's a sign of the environment we're in. We've had a record rally off the April lows. Most of the major indexes are up 20, 30%. Stocks like Robinhood, Coinbase, Palantir, retail favorites are up 200, 300% in this short period. We're coming off two back-to-back 25% plus years in the S&P. And so, I mean, animal spirits are alive and well. I read a stat today, 70% of the options market volume is on the call side, and 27% of year-to-date volume in trading across the board is coming in stocks under $5. That's even higher than during the pandemic. Because I I I asked that question, Tom, because I can understand some viewers would be watching this and they would be thinking to themselves, well, all of a sudden we're talking about Josh and Tom were talking meme stocks, we're talking about spacks again. Just whether you see this sort of speculative activity and is it a side to you of froth in the market. Yeah. Yeah, typically we see this type of activity towards the latter end of a move. So, again, not calling a market top, but I mean, think about it. We're up 30% in the indices over three months. A lot of great news has been priced in, and I think earning season is kind of bringing the market kind of back into to focus on the fundamentals. Um, and so I think it's just a sign of the times. People, you know, when you see your portfolio going up 25% in three months, you're not really interested in making one or two percent here. You're going for multibaggers, as they like to say online. But I think it's also important to frame the conversation. People are not all in and all out. They are using a portion of their portfolio that is for fun and speculation and, you know, growth, uh, for these opportunities and not necessarily taking the excessive risk that I think a lot of people think of. And when you're watching these moves, Tom, do we have line of sight of of who's in? I mean, is this retail traders? Is it the pros? Is it both? Yeah, what I've been saying is that retail is starting the party and then forcing the institutions to dance. And what I mean by that is the institutions are kind of setting these stocks up for a meme type situation, heavily shorted brand names that like have some fundamental value, but you know, are not going to zero. And then we have sophisticated investors online, retail, using market mechanics against the institutions. So in the situation of calls earlier this week, the stock moved from $11 to $20 in the pre-market. It doesn't take a whole lot of volume on the retail side to be able to move a stock like that. And if you're an institution that's short, uh, or or hedged against that stock, you got to make that move at the open. And so it's kind of a situation where retail is saying, hey, this situation doesn't make sense to us. There's a fundamental case to be made here, and we're going to move the market in our direction and the institutions will have to adjust. Let's say you're a GoPro or Krispy Kreme. Yeah. You see these moves, right? What should be, you think time, your reaction, your response? How should you, if at all, try and take advantage of it? Yeah. I mean, every company with high short interest right now should be thinking about how do we convert conversation and attention into capital and long-term shareholder conviction. The difference between this being a short-term move where the stock just pops and and moves lower is management's ability to go out there, raise capital, uh, get their balance sheets in focus, and really tell a compelling story for shareholders to say, hey, this is not just a trade. We're really turning this business around. There's a fundamental reason to be involved here. And I think it's the investor relations departments, the the executives that are using online platforms like Stocktwits, like Twitter, like Reddit, to get their messaging out there and tell a compelling story. Those are going to be the ones that stick around. Those who choose not to engage with retail are likely going to see their stock fall. Let's have another another name I want you to take on Opendoor. Uh, we had EMJ's Eric Jackson on on YFi talking about the name. Take a listen to what he had to say. Yeah. Open door's not a meme stock. This is a real turnaround legitimate turnaround story. It's an opportunity for anybody who missed Carvana. And I missed it at 350. I got in at $15 on Carvana. So I think I do know what to look for in these kinds of situations, um, and I think that this is the ground floor for a move to 82. What what do you make of Mr. Jackson's comments? He's talking Opendoor and he saying, listen, this is a real story. This is a fundamental story. What do you make of that? Yeah. I think individual story aside, I think that's what's kind of attracting people to these situations. They see a company that's beaten down, highly bet against, and there's some glimpse of a fundamental case to be made where somebody can say, you know what? I I kind of believe that. You know, maybe it shouldn't be trading at 82, but maybe it shouldn't be trading at a dollar. And there's a lot of room in between there. And so we're seeing people reassess situations that have otherwise been left for dead. And as retail gets into these names, institutions also have to adjust and, again, I think it's going to come down to the management team of Opendoor. What do they do with this situation? Um, how do they create a compelling narrative? Because right now it's all about the stock price. It's all about what's happening with trading, but what's actually happening with the company? What are they going to do from a strategy perspective to get this back on the right footing? More broadly, Tom, I'm also just interested in the Stocktwits community. How do they feel right now about this market? Where do they stand on this rally after the move we've seen after that April low? Yeah. I mean, it's quite, uh, quite amazing. Throughout the April period, we saw kind of institutions running for the hills on on tariff concerns, but retail was in there buying the dip, and they've been quite aggressive throughout this entire rally. But that said, we're seeing some catch-up plays, uh, you know, come to fruition here. So instead of focusing on a Robinhood or Coinbase that's up, you know, hundreds of percentages already, they're looking at other opportunities. We're looking international. Japan just, uh, just signed a trade deal. Um, you know, Chinese stocks are are set to play catch up if they can get a deal. So people are looking for value. They're still bullish overall, but they're looking for opportunities where, uh, maybe the the puck is going as opposed to where it's been. When I last spoke to you, Tom, I remember, correct me if I'm wrong, but there was a lot of interest, enthusiasm, again, the Stocktwits community on themes like nuclear, um, things like AI, crypto. Are those still front and center? Yeah. Yeah. That's continuing. You're just seeing, uh, money rotate within those themes. So rather than play it directly through Nvidia or directly through the same names, um, they're looking for other opportunities. So lithium stocks, uh, are a big one that I've seen pop off over the last couple of weeks. Um, solar stocks are are catching a bit again. So people are seeing these broader themes and saying, okay, instead of buying the the nuclear energy stock that's already up 400%, maybe I buy a solar stock because I know that there's going to be some energy component to this kind of broader theme. So Last last question, Tom. What about crypto? Is that still a point of interest on the platform? It it's, um, you know, it's kind of spread as risk appetite has, um, kind of widened here. Seeing a lot of meme coins, a lot of interest around Ethereum. There's a couple of treasury, uh, you know, Ethereum treasury companies out there. So, uh, definitely a hot area. I think the next phase for crypto and where people are looking on Crypto Twitter is, uh, stable coins. You know, we've got Circle, we've got Robin Hood making a big, uh, move into staking and stable coins. So I think that's kind of the next leg of this, uh, you know, crypto market rally.
Yahoo
24-07-2025
- Business
- Yahoo
Meme stock rally has investors feeling 'invulnerable' as speculative bets power markets at record highs
For retail investors, the summer of 2025 is quickly turning into the latest meme stock moment. Stocks like Opendoor (OPEN), Kohl's (KSS), and Krispy Kreme (DNUT) have replaced yesterday's meme darlings like GameStop (GME), AMC (AMC), and now-shuttered Bed, Bath & Beyond as the latest market curiosities, treating investors to wild price swings with little fundamental backing to explain the moves. Opendoor stock is up more than 300% over the past month and saw a 140% increase in retail trading over the two weeks preceding Friday compared to the previous month, according to data from trading data platform VandaTrack. Even with a roughly 21% decline since the opening bell on Monday, the stock is up more than 50% over the last five days. On Wednesday, Krispy Kreme and GoPro (GPRO) rose by more than 90% and 70% in premarket trading, respectively — the latest entrants in 2025's meme stock redux. Both swung to losses before the bell on Thursday, after coming off intraday highs to close with less-spectacular gains. What's driving the renewed interest in highly speculative bets on names long ago written off by Wall Street? According to Interactive Brokers chief strategist Steve Sosnick, the market environment is simply right for risk. "I think more and more investors are feeling somewhat invulnerable right now," Sosnick told Yahoo Finance. "Everything they've been trying has been working for them. If the basic stuff's working, why not try a bit more speculative stuff?" After a historic drop in stocks following President Trump's early April "Liberation Day" tariff surprise, the stock market has spent the past few months roaring back as worst-case scenarios for trade and the global economy appear less likely. Now, the S&P 500 is routinely hitting record highs, including on Wednesday. For investors who had the stomach to hold in early April, or even buy into the dip, those bets have largely worked out spectacularly well. And the winners haven't only been confined to the meme darlings mentioned above. The risk-on environment has been buoyed by steady belief in the AI trade from investors. Nvidia (NVDA) has seen its stock price increase by more than 90% since its April nadir, while shares in Microsoft (MSFT) and Meta Platforms (META) have grown by more than 40% since their respective April lows. Crypto enthusiasm, which has also gotten a boost from the White House, along with a refreshed IPO market, has seen stocks like Coinbase (COIN), Circle Internet Group (CRCL) and CoreWeave (CRWV) — which recently announced a $9 billion acquisition of Core Scientific (CORZ) — shoot upward by more than 60%, 550%, and 200% since the start of the year, respectively. Robinhood Markets (HOOD), the retail investor-focused trading platform, is up more than 170% on the year. Even SPACs are seeing a resurgence from their 2021 highs, with more than 70 blank-check IPOs and more than $12 billion in issuance recorded since the start of the year, according to data from SPAC-focused hedge fund RLH Capital. Data from Stocktwits shows some 68% of the options market is now in calls, or options for the right to buy a certain security at a certain price — the highest concentration since 2021's meme stock craze. The firm's data also shows more than 25% of all trading volume this year has been in stocks under the $5 share price line. Low per-share stocks were also a staple of 2021's meme stock rally. The origins of the 'meme stock' meme In January 2021, deep in the throes of the pandemic, speculative stock betting by retail traders reached a fever pitch. An explosive rally in shares of GameStop eventually canonized what investors now know as a "meme stock." Spurred by discussion on the subreddit wallstreetbets and the bull case made by one individual investor — Keith Gill, known to redditors as "Roaring Kitty" — GameStop shares swelled by as much as 1,600% in January 2021 before crashing in early February. The rally in GameStop was so strong that it led Gabe Plotkin, founder of the hedge fund Melvin Capital Management, to shutter his fund after the firm's short bets on GameStop went upside down in a "short squeeze" as the stock rallied. An almost equally explosive run-up in AMC stock helped the theater operator stave off the threat of bankruptcy. Four years later, the names are different and the gains may be more modest, but the shape of the rally is similar. Wallstreetbets has been inundated over the past few weeks with posts about a growing basket of names that have been ID'd for potentially massive gains, including Opendoor, Kohl's, GoPro, Krispy Kreme, and BitMine Immersion Technologies (BMNR). As one post from earlier this week on wallstreetbets read, "Tastes like 2021 again. $130K YOLO on $RKT, 99.99% of my account on the line." Rocket Companies (RKT) stock is up about 15% this week. And taking a version of the role vacated by Roaring Kitty is hedge fund manager Eric Jackson. Jackson, who rose to prominence for being an early spotter of Carvana's (CVNA) turnaround, publicly laid out a bull case for Opendoor earlier this month with a price target of $82 for a stock currently trading below $3. 'It could all end tomorrow' And much like 2021, small-cap names grabbing headlines now tend to have a relatively high percentage of their shares on the market sold short. For Opendoor and Krispy Kreme, the percentage of outstanding shares being sold short is sitting at around 21% and 28%, respectively. Meanwhile, Kohl's boasts a whopping 49% short float, which means that just under half of its outstanding eligible shares are being borrowed to bet the company's share price will drop. Some strategists have even suggested this "short squeeze" theme is playing a significant role in the broader market's rebound from those April lows. A notable difference from 2021, however, is that the half-life of trades on new-age meme stock names like Opendoor seems to be shorter than the timelines that ended up sustaining a long retail bull run on GameStop in 2021, Interactive Brokers' Sosnick told Yahoo Finance. "It could all end tomorrow, it could all end in months … Kohl's is not going to suddenly become a great company tomorrow," Sosnick said. "If enough people get on one side of an option trade, it can become self-fulfilling, at least in the short term." This market environment also isn't without risk — and harm — to individual investors that are often swept up in these trades. A study released in June from the CFP Board of Standards found that 57% of Americans have made a poor financial decision based on information they saw online, while 18% have lost more than $1,000 based on online information. "This kind of retail behavior often marks short-term tops," Stocktwits editor in chief Tom Bruni told Yahoo Finance. "When the buzz dies down in these highfliers, we usually see broader market consolidation or a pullback." Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at Click here for in-depth analysis of the latest stock market news and events moving stock prices
Reuters
23-07-2025
- Business
- Reuters
Meme stocks pare gains as highly shorted Krispy Kreme, GoPro join the frenzy
July 23 (Reuters) - Investor enthusiasm faded for the latest meme stocks on Wednesday, with shares in heavily shorted Krispy Kreme (DNUT.O), opens new tab and GoPro (GPRO.O), opens new tab closing well below their session highs, while Tuesday's investor darling - department store Kohl's - finished sharply lower. Individual investors have been betting on riskier pockets of the market, including cryptocurrencies and lower-priced consumer-facing stocks, as the broader equity market has soared to record highs recently. Shares of doughnut chain Krispy Kreme, nearly 32% of whose free float has been shorted, ended up 4.6% at $4.32. Earlier the stock hit a session high of $5.73, with a record trading volume of more than 151 million shares. The stock had rallied nearly 27% on Tuesday with 44 million shares changing hands compared with the 5.28 million average for the last 50 days. Earlier on Tuesday, Krispy Kreme was among the top trending stocks on Stocktwits, a retail investor-focused social media platform. Action camera maker GoPro's shares rose 12.4% to $1.54 after earlier hitting $2.37, the highest level since late March 2025. Plant-based meat company Beyond Meat (BYND.O), opens new tab added 1.4% after earlier hitting $4.82, its highest level since December 4. Many individual investors did well by taking risky bets when institutions were selling in April, when equity volatility erupted over uncertainty around U.S. tariff policies, according to Steve Sosnick, chief strategist at Interactive Brokers, which has a high number of retail customers. 'That has given them the financial wherewithal and the psychological temperament to seek out risky situations. They were rewarded handsomely for embracing risk at a very risky time," Sosnick said. "Now they're extending it to search for high-risk situations that have potentially high returns.' With the paring of gains on Wednesday, Sosnick said the staying power of the meme-type rallies seemed to be shrinking. "People realize that there isn't a fundamental reason for these rallies to be occurring. They're simply occurring at the intersection of social media and the stock market," he added. Daniela Sabin Hathorn, senior market analyst at wrote that risks are as stark as the rewards in meme rallies. "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," she said. The current market 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 involved in the current meme wave. While it is still up almost 330% for July, it lost 20.5% on Wednesday to close at $2.29, a far cry from a July peak of $4.97 - its highest level since August 2023. Some market participants attributed the Opendoor rally to posts last week by EMJ Capital founder and portfolio manager Eric Jackson, who said his hedge fund took a position in Opendoor and projected it would hit $82 in the longer term. "When I first started tweeting about Opendoor last Monday afternoon, I definitely wasn't thinking it was going to be considered a meme stock," Jackson said on Wednesday. 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. Department store Kohl's (KSS.N), opens new tab shares 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 the stock appeared to exemplify the fickle nature of meme stocks with a 16% decline on the day. Online gifts retailer (FLWS.O), opens new tab, with a short interest on 71.66% of its free float, ended up 4.4% after jumping about 27% earlier in the day. According to Ortex research, moves in Beyond Meat and were most susceptible to a short squeeze. 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. Another notable mover without news announcements on Wednesday was Pineapple Financial , which rallied 70% to $5.95. More than 25 million shares changed hands versus the previous session's volume of less than 1 million shares. The stock hit a session high of $9.53 earlier on Wednesday.
