Donuts, Cameras, and Chaos: Why Kohl's & Krispy Kreme Are Retailers' Favorites Now?

The frenzy of "no fundamentals, just speculation" trading continued on Wednesday, with the latest momentum shifting toward donut maker Krispy Kreme and camera equipment company GoPro.

Krispy Kreme surged more than 30% in pre-market trading after a 26% jump the previous session, while GoPro soared over 50% pre-market following a 40% rally on Tuesday. Meanwhile, two other meme stocks lost steam—Opendoor Technologies fell nearly 10%, and Kohl’s also weakened.

According to LSEG data, about 14% of Krispy Kreme’s float is sold short, while GoPro’s short interest stands at 7.7%. Beyond Meat, a plant-based meat company with a staggering 36.7% short interest, also rose over 15% in pre-market trading.

True to the pattern of U.S. retail-driven frenzies, Krispy Kreme’s call option volume skyrocketed to 100,000 contracts on Tuesday—71 times its four-year daily average. GoPro’s call volume also hit 56,000 contracts, the highest since 2021.

In recent days, Reddit’s WallStreetBets forum has fueled another meme stock rally. Real estate company Opendoor surged 188% last week, while Kohl’s briefly doubled on Tuesday.

Following the retail crowd’s consensus strategy, heavily shorted stocks like Campbell’s, Aehr Test Systems, Polaris Industries, and Wendy’s have also become targets for short squeezes.

Notably, beyond their susceptibility to short squeezes, these hyped stocks lack fundamental justification for their rallies. Take Kohl’s: The 1,100-store U.S. retailer posted a $15 million Q1 loss with net sales down 4% year-over-year. CEO Ashley Buchanan was fired in May after the company found he violated conflict-of-interest policies by hiring suppliers with personal ties without disclosure.

Ihor Dusaniwsky, S3 Partners’ managing director of predictive analytics, calls these meme stocks "battleground stocks"—where retail traders and short sellers clash violently in the market.

In a research note, he stated: "In this charged atmosphere, even a single dollar of uncommitted capital - dry powder waiting in the wings - can unleash a stampede, tipping the balance in a heartbeat and generating jaw-dropping price swings within a single session. It's not just investing - it's a tactical war zone where sentiment and strategy collide."

Some analysts suggest the meme stock resurgence may reflect retail traders’ disinterest in blue-chip stocks hitting record highs.

Vanda Research data shows risk-seeking retail investors pivoted toward higher-beta plays in Q2—small caps and niche AI stocks. The trend accelerated in July, with Joby, D-Wave Quantum, Archer Aviation, and BigBear.ai among the most-bought stocks by retail traders this month.

Adam Crisafulli, founder of Vital Knowledge, warned Tuesday that while corporate earnings remain solid, the Opendoor and Kohl’s mania acts as "a giant red flag in markets," adding that "froth this extreme is never a good sign."