23-07-2025
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.
