Retail Trading Sentiment and Institutional Fundamentals: A Contrarian Analysis of Meme Stocks vs. Blue-Chip Underperformance

In the spring of 2023, Kohl's (KHC) and Opendoor (OPEN) became the latest darlings of retail investors. Their surges—driven by social media hype, short squeezes, and speculative fervor—mirrored the GameStop (GME) and AMC (AMC) phenomena of 2021. Yet, beneath the noise, a stark reality emerges: these stocks are decoupled from fundamentals. Meanwhile, companies like Lockheed Martin (LMT) and General Motors (GM), with robust backlogs, technological leadership, and disciplined capital allocation, have underperformed the market. This divergence raises a critical question: Are investors rewarding irrational exuberance while overlooking durable value?

The Meme Stock Mirage: Opendoor and Kohl's

Retail-driven rallies often thrive on narrative, not numbers. Opendoor, a digital real estate platform, surged 189% in one week in early 2023 after hedge fund manager Eric Jackson promoted it as a “100-bagger” on X. Despite posting losses since 2022 and a current ratio of 1.1 (indicating liquidity strain), Opendoor's stock price soared on the back of a reverse stock split and high short interest. Similarly, Kohl's (KHC) rallied 105% in pre-market trading in early 2023, fueled by a Goldman Sachs price target increase and a 63% short float. By the end of the day, 99% of its float had been traded—a clear short squeeze.

These movements are not about earnings but about momentum. reveals a pattern: sharp, unsustainable spikes followed by corrections. Kohl's, for instance, saw its stock price drop 40% from its 2023 peak by mid-2025, as analysts warned of its declining sales and liquidity challenges. Opendoor's shares, which reached $2.25 in early 2023, fell to $0.80 by 2025, despite Jackson's bullish forecasts.

The meme stock playbook is clear: leverage social media, exploit short interest, and create a “next big thing” narrative. However, these rallies are inherently fragile. As one analyst put it, “Retail-driven surges are like fireworks—they light up the sky but leave little behind.”

Blue-Chip Underperformance: LMT and GM's Contrarian Case

While meme stocks dazzle, companies like Lockheed Martin and General Motors are quietly building long-term value. Lockheed Martin, a defense sector titan, reported $71.04 billion in revenue in 2024—a 5.14% increase—despite a 22.89% drop in net income. This underperformance was driven by margin compression (11.89% gross margin, down from 14.55%) and rising operational costs. Yet, LMT's $176 billion backlog, 83.41% ROE, and $5.29 billion in free cash flow (used to return $6.76 billion to shareholders) paint a different story.

General Motors, meanwhile, has navigated a volatile automotive landscape with resilience. In Q2 2025, GM's U.S. sales surged 12% year-to-date, outpacing the industry's 4% growth. Its EV sales grew over 100%, with Chevrolet becoming the top-selling EV brand. Despite these metrics, GM's stock lagged, reflecting broader industry headwinds like tariff uncertainty and EV battery supply chain disruptions.

The disconnect here is striking. shows that both companies trade at discounts to their historical averages. LMT's forward P/E of 16.56x is 20% below its 5-year average, while GM's EV/EBITDA of 12.04x is at a 30-year low. These valuations ignore the companies' strategic strengths: LMT's leadership in hypersonic and AI-driven defense systems, and GM's $10 billion stock buyback program and 29% Buick crossover sales growth.

Contrarian Logic: Why the Market Is Mispriced

The meme stock phenomenon thrives on short-term speculation, while blue-chips are penalized for near-term volatility. This mispricing creates opportunities for contrarian investors.

1. Opendoor and Kohl's: High-Risk, Low-Return Narratives
2. Opendoor's rally was built on a narrative of “long-term growth” despite a 17.2% drop in cash from operations in 2023. Its $82 price target, based on hypothetical Zillow-like multiples, ignores its $1.6 billion net loss.

3. Kohl's's 2023 surge was a classic short squeeze, not a value play. Its 1.1 current ratio and declining net sales ($17.1 billion in 2023, down from $22.2 billion in 2019) highlight structural challenges.

4. LMT and GM: Undervalued Fundamentals

5. Lockheed Martin's margin pressures are temporary, driven by inflation and contract mix. Its 60% HIMARS production increase and $870 million F-35 contract in 2025 suggest durable demand.
6. General Motors's EV pivot, while nascent, is gaining traction. Its Ultium battery strategy and 12% U.S. market share position it to benefit from long-term EV adoption.

Investment Advice: Balancing Risk and Reward

For investors, the key is to differentiate between hype and substance. Meme stocks like Opendoor and Kohl's offer high-risk, high-reward scenarios suited for those with a short time horizon and risk tolerance. However, their volatility and lack of fundamentals make them unsuitable for long-term portfolios.

Conversely, LMT and GM represent undervalued opportunities for patient investors. Lockheed Martin's 2.81% dividend yield and $176 billion backlog provide a margin of safety, while GM's 12% sales growth and $10 billion buyback program offer capital appreciation potential.

Action Steps for Contrarian Investors:
- Short-Term: Consider hedging meme stock positions with put options or short-term volatility indicators.
- Long-Term: Allocate to LMT and GM at current valuations, focusing on their durable cash flows and strategic positioning in defense and automotive innovation.

The market's current imbalance—favoring noise over numbers—is a reminder that contrarian investing requires discipline. While meme stocks may capture headlines, the real value lies in companies with strong fundamentals, even if they underperform for now. As Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” In 2025, the time may be ripe to embrace the latter.