Meme Stocks' Third Act Tests Retail's Risk Appetite: A Volatile Cycle Ahead

Meme stocks such as Krispy Kreme and GoPro experienced gains, but quickly faded as retail traders rotated into cheap, consumer-facing names and crypto plays. Opendoor, an early star of the meme wave, plunged 20% after a 300% monthly run. Retail traders are responsible for 25% of US order flow, amplifying intraday volatility. Social catalysts and heightened borrow costs can spark fresh squeezes, but exits must be preplanned.

July 2, 2025

Retail traders have once again demonstrated their influence in the stock market, driving significant gains for meme stocks like Krispy Kreme and GoPro before shifting focus to other consumer-facing names and crypto plays. The latest wave of speculation, reminiscent of the 2021 GameStop frenzy, has been characterized by heightened intraday volatility, with retail traders responsible for 25% of U.S. order flow [1].

Krispy Kreme and GoPro: Initial Gains, Rapid Fade
On Wednesday, shares of Krispy Kreme, nearly 32% of whose free float has been shorted, rallied 4.6% to close at $4.32 after hitting a session high of $5.73 with a record trading volume of over 151 million shares [2]. Similarly, GoPro's shares rose 12.4% to $1.54, reaching a high of $2.37 [2]. The stocks were heavily cited on WallStreetBets, the online forum behind the 2021 GameStop mania.

Opendoor's Plunge After Wild Run
Opendoor Technologies, an early star of the meme wave, experienced a 20.5% drop on Wednesday after a 300% monthly run. The stock closed at $2.29, a far cry from its July peak of $4.97 [2]. The stock's rally was attributed to X.com posts by Eric Jackson, who projected it would hit $82 in the longer term [2].

Crypto Plays and Meme Stocks
Retail traders have also been shifting focus to crypto plays. Trump Media & Technology Group Corp. saw its stock rally to a six-week high on Tuesday, with Bitcoin making up about two-thirds of its $3 billion in liquid assets [3]. Other companies like MicroStrategy Inc. have also been ramping up their Bitcoin treasury efforts.

The Role of Social Catalysts and Borrow Costs
The recent moves in meme stocks and crypto plays underscore the role of social catalysts and heightened borrow costs in sparking fresh squeezes. However, the rapid exits from these positions highlight the need for preplanned exits to manage risks.

Conclusion
The latest retail trader-driven market activity underscores the significant influence of individual investors in the stock market. While these moves can create significant gains, they also highlight the importance of fundamental analysis and risk management in navigating the volatile market.

References
[1] https://finance.yahoo.com/news/highly-shorted-krispy-kreme-gopro-101134199.html
[2] https://www.cnbc.com/2025/07/23/gopro-krispy-kreme-join-the-meme-party-as-wall-street-speculation-ramps-up-.html
[3] https://www.morningstar.com/news/marketwatch/20250722130/trump-medias-stock-gets-a-bitcoin-bump-as-truth-social-parent-is-now-a-2-billion-player