Key Points:
- GoPro and Krispy Kreme soar as meme traders pile in
- Both stocks are cheap and heavily shorted
- Opendoor drops after a massive run-up
- Beyond Meat and 1-800-Flowers also spike
New Meme Darlings: GoPro and Krispy Kreme
Retail investors turned their attention to GoPro (NASDAQ: GPRO) and Krispy Kreme (NASDAQ: DNUT) on Wednesday, triggering sharp rallies in both stocks. GoPro surged more than 56% while Krispy Kreme climbed 20% in early trading. The surge follows a wave of chatter on Reddit’s WallStreetBets, the same forum that propelled GameStop and AMC into the spotlight during the 2021 meme stock craze.
Both companies are seen as ideal meme candidates: they trade at low prices and carry significant short interest. GoPro currently has a short interest of 12.17 million shares, representing 9.69% of the public float. The short interest for Krispy Kreme is 24.16 million shares, representing 28.08% of the company’s float.
Retail Traders Rotate Out of Opendoor
The new focus on GoPro and Krispy Kreme comes as retail enthusiasm for Opendoor (NASDAQ: OPEN) fades. After rallying more than 400% earlier this month, Opendoor shares dropped another 17% on Wednesday. The stock had drawn attention following bullish posts on X (formerly Twitter) from EMJ Capital’s Eric Jackson. It is currently trading just over $2.
Broader Market Optimism Fuels Risk Appetite
The meme stock rally comes amid a broader surge in U.S. equities, with the S&P 500 reaching a new all-time high on Tuesday and pushing its year-to-date gains past 7%. Key factors driving the rally include the passage of the OBBB economic stimulus bill, unexpectedly strong U.S. economic data, growing optimism for multiple Fed rate cuts before year-end, and easing concerns over trade tensions.
Short Squeeze Candidates Surge
Several heavily shorted stocks surged amid the latest wave of speculative trading, with Beyond Meat (NASDAQ: BYND) and 1-800-Flowers.com (NASDAQ: FLWS) rising sharply. Kohl’s (NYSE: KSS) spiked on Tuesday before retreating on Wednesday. Market participants pointed to a combination of high short interest, low share prices, and strong retail visibility as key drivers.
Déjà Vu from 2021
The resurgence of retail-driven, short-squeeze-fueled trading has reignited memories of the 2021 meme stock frenzy, when Reddit-fueled rallies in names like GameStop and AMC dealt heavy blows to short-selling hedge funds. With retail investors now making up nearly 25% of U.S. equity trades, according to JPMorgan, meme stocks are poised to remain a volatile and influential force in market dynamics for the rest of the year.