Retail Traders Drive Krispy Kreme and Kohl's Stocks to Soar Without News as Meme Stock Fever Returns

Meme Stock Renaissance: The Digital-Age Market Revolution Returns with a Vengeance

The flickering screens at a Chicago trading desk cast an eerie glow across Marcus's face as he watched Krispy Kreme shares rocket upward Tuesday afternoon. "It's happening again," the 15-year veteran equity trader muttered, his voice a mixture of awe and apprehension.

Without warning or fundamental catalyst, the doughnut maker's stock had surged 26.69% during regular trading hours, then catapulted another 24.69% after-hours. By Wednesday morning, trading terminals across Wall Street displayed the unmistakable jagged peaks of extreme volatility—not just in Krispy Kreme, but across a widening universe of previously left-for-dead retail brands and struggling companies.

The meme stock phenomenon—that uniquely 2020s marriage of social media virality, retail trading power, and short-seller vulnerability—has returned with explosive force.

The Sugar Rush of Sentiment Over Substance

Krispy Kreme's trajectory tells the story in numbers: 37 million shares exchanged hands on Tuesday, dwarfing its average daily volume of 4.68 million. The stock, which had languished near multi-year lows at $3.26, suddenly found itself approaching its 200-day moving average of $7.05 after hitting $5.15 in after-hours trading.

What propelled this sudden resurrection? Not earnings. Not a strategic pivot. Not acquisition rumors.

"There's literally no company-specific news driving this," explained Amara Washington, chief market strategist at Capital Horizon. "What we're witnessing is pure sentiment—the digital equivalent of a stadium wave, except instead of fans, it's retail traders moving in coordinated patterns across Reddit forums and social platforms."

The phenomenon extends beyond sugar-glazed treats. Kohl's Corporation experienced even more dramatic turbulence on the same day, with shares briefly doubling at market open—surging 105% to $21.23—before settling into a still-remarkable 30-40% gain by afternoon. Trading volume ballooned to roughly ten times its three-month average, triggering circuit breakers that temporarily halted trading.

The Anatomy of a Digital-Age Market Rebellion

Behind these wild price swings lies a confluence of factors that market veterans find both fascinating and troubling. The common thread linking these stocks? Extraordinarily high short interest.

Krispy Kreme's float was 26.35% sold short ahead of its surge. Kohl's situation was even more extreme, with approximately 50% of available shares being borrowed and sold by investors betting on further price declines.

"These elevated short positions create the perfect storm for a squeeze," said Raj Mehta, a quantitative analyst who specializes in market structure. "When buying pressure intensifies, short sellers face mounting losses and must purchase shares to close their positions. This creates a self-reinforcing cycle of upward pressure—essentially, panic buying by the same institutions that were betting against these companies."

The mechanics of these squeezes are not new, but the catalysts have evolved. What once required coordinated action by powerful institutional investors can now be accomplished through the distributed power of social media.

On Tuesday morning, mentions of Krispy Kreme and Kohl's exploded across retail investor forums. Reddit's WallStreetBets, Stocktwits, and various Discord channels lit up with rocket emoji and enthusiastic posts. By mid-day, both stocks were trending tickers, drawing ever more attention from momentum-chasing traders.

"We're seeing classical network effects at work," explained Dr. Emma Rodriguez, who studies behavioral finance at the University of Chicago. "Each new participant who joins the buying frenzy increases the value proposition for others to join. It's less about the underlying business and more about the game theory of coordinated action."

The phenomenon has expanded beyond the original meme stock darlings of 2021. Recent weeks have witnessed similar explosive moves in a diverse array of heavily-shorted names:

Opendoor Technologies swung more than 120% in early July, with an astonishing 925 million shares traded in a single session, driven partly by a prominent activist investor's mention on X (formerly Twitter).
Beyond Meat surged 15-20% on a burst of social media enthusiasm, despite increasing competition in the plant-based protein space.
Newegg Commerce, Virgin Galactic, and QuantumScape have all experienced sudden spikes between 10-50% on otherwise quiet market days.

The Psychological Underpinnings of Mass Financial Behavior

Market psychologists point to several factors driving the resurgence of this trading pattern. Primary among them is what behavioral economists call "recency bias"—the tendency to overweight recent experiences when making decisions.

"Many retail traders experienced or witnessed the extraordinary gains possible during the original meme stock wave," said Dr. Rodriguez. "Those memories create powerful anticipatory emotions—the fear of missing another massive rally can override rational analysis of business fundamentals."

This fear of missing out creates cascading effects. As one market participant who requested anonymity put it: "Watching a DNUT chart today felt like staring at neon graffiti—bright, loud, and nearly impossible to ignore, but with almost no clue what it means tomorrow."

The comparison to social media trends is apt. "Kohl's rally had more in common with a TikTok dance challenge than a retail turnaround," observed one veteran floor trader. "It's contagious, ephemeral, and largely disconnected from the company's actual prospects."

The Double-Edged Sword of Democratized Finance

The technological infrastructure enabling these movements represents both triumph and challenge for modern markets. Zero-commission trading platforms, fractional share ownership, and instant information dissemination have democratized access to financial markets in unprecedented ways.

"What we're witnessing is a genuine power shift," said Mehta. "Retail traders, when moving in loose coordination, can now exert market influence that was once the exclusive domain of hedge funds and institutional players."

This democratization comes with clear benefits. Broader market participation increases liquidity and theoretically improves price discovery. It allows smaller investors to participate in wealth creation opportunities previously reserved for the financial elite.

But the same mechanisms create risks. Extreme volatility can wipe out gains—or entire investment accounts—overnight. The disconnect between share prices and business fundamentals raises questions about efficient capital allocation. And the game-like aspects of these trading patterns may blur the line between investing and gambling for inexperienced participants.

Navigating the New Market Landscape

For professional investors and retail traders alike, the meme stock resurgence requires adaptation. Traditional valuation metrics like price-to-earnings ratios and discounted cash flow models haven't disappeared, but they now compete with sentiment indicators and momentum signals in driving short-term price action.

"We're adding new layers to our analysis," said Washington. "Beyond the fundamentals, we now track social media mention volume, short interest ratios, and options activity patterns to identify potential meme candidates before they move."

For regulators, the phenomenon presents complex challenges. The SEC continues to monitor these markets closely, potentially considering new rules around short-selling disclosures, payment-for-order-flow practices, and what constitutes market manipulation in the social media age.

Investment Implications: Navigating the Meme Stock Maze

For those considering participation in these volatile names, market professionals suggest several approaches:

Position sizing becomes crucial. "If you're entering these trades, consider using only a small portion of your portfolio—perhaps 5% or less," advises Washington. "The potential for rapid gains comes with equally rapid losses."

Time horizons matter tremendously. "These are primarily short-term trading vehicles, not long-term investments," Mehta cautions. "Have clear exit strategies for both profit-taking and loss limitation."

Looking forward, analysts see distinctive patterns likely to emerge:

In the near term, expect continued volatility and potential short squeezes in heavily-shorted, low-float stocks as social platforms hunt for "the next GameStop." This may create trading opportunities for those with strict risk management.

Over the medium term, without substantive catalysts, many of these stocks will likely retrace sharply once the squeeze dynamics exhaust themselves. Companies with smaller floats may experience the most dramatic reversals.

Long-term investors should remain focused on business fundamentals. A select few companies caught in these trading frenzies may successfully use the attention and potentially improved stock prices to restructure, raise capital, or attract talent—potentially creating lasting value. However, most will ultimately trade in line with their operational results and growth prospects.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance does not guarantee future results. Investors should conduct their own research and consult with financial advisors before making investment decisions.