The DORK Stocks and the Resurgence of Meme Stock Trading in 2025

In July 2025, the stock market witnessed a familiar yet unsettling phenomenon: the resurgence of meme stock trading, led by the so-called “DORK” stocks—comprising Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Companies (RKT), and Kohl's (KSS). These stocks, once dismissed as underperforming or overleveraged, have become the latest darlings of retail traders, fueled by social media hype, short squeeze dynamics, and a “buy-the-dip” mentality. While the spectacle echoes the 2021 GameStop and AMC frenzy, the current wave carries unique risks and opportunities shaped by evolving market structures and investor behavior.

The Drivers of the DORK Surge

The DORK rally is not driven by fundamentals. Krispy Kreme, for instance, surged 39% in a single day in early July despite a 33% short interest rate and a history of earnings disappointments. Opendoor, a real estate tech company teetering near delisting, skyrocketed over 440% in a month after a high-profile endorsement from a hedge fund manager on X. Kohl's, a retail giant with a 50% short interest, saw a 38% one-day jump due to coordinated Reddit-driven buying. These moves reflect a market where sentiment trumps balance sheets, and retail traders act as a collective force to challenge institutional short positions.

The resurgence is amplified by structural factors. Advances in trading technology, the proliferation of leveraged options, and regulatory shifts—such as proposed reductions in margin account requirements—have democratized access to speculative trading. Meanwhile, the broader market's complacency, with the S&P 500 trading at a 22.5 forward P/E ratio, has created a fertile ground for retail-driven volatility.

Risks in the Meme Stock Bubble

The DORK stocks exemplify the dangers of speculative mania. For every investor who celebrates a 10x return, there are countless others who chase the peak and face steep losses. Opendoor's 20% single-day drop in late July, despite a bullish price target from a prominent figure, underscores the fragility of these gains. Similarly, Kohl's temporary trading pause during a 38% surge highlighted the systemic risks of concentrated retail buying.

Experts warn that meme stocks are inherently unstable. Tony DeSpirito of BlackRock has labeled them “the epitome of greed,” emphasizing their disconnect from earnings, cash flow, or growth. Wolfe Research, meanwhile, has dubbed the DORK rally a “junk rally,” noting that many of these stocks were already on its shorted “Hit List” of underperformers. The high short interest in these stocks creates a precarious equilibrium: a short squeeze can propel prices rapidly, but the same forces can just as quickly reverse course when sentiment shifts.

Moreover, the broader market's resilience—driven by strong labor data, easing inflation, and AI-driven tech growth—does little to insulate meme stocks from their inherent volatility. The S&P 500's 10-year average P/E of 15.8 contrasts sharply with the DORKs' speculative valuations, which rely on momentum rather than fundamentals. A sudden correction, whether triggered by economic data, regulatory actions, or a shift in retail sentiment, could erase gains swiftly.

Opportunities Amid the Chaos

Despite the risks, the DORK rally highlights the power of retail capital and the potential for rapid, asymmetric returns. For disciplined traders, meme stocks can offer high-risk, high-reward opportunities, particularly in short squeeze scenarios. For example, Rocket Companies (RKT), with a 13% short interest and a 100% year-to-date gain, has benefited from a combination of retail buying and favorable sector trends in digital services.

The surge also reflects a broader shift in market dynamics. As retail investors become more tech-savvy and organized, their influence on price discovery is growing. This democratization of trading can disrupt traditional power structures, forcing institutions to adapt to a more fragmented and unpredictable market. For investors with the patience and risk tolerance to navigate the noise, meme stocks can serve as a barometer of market sentiment and a test of trading discipline.

A Cautionary Path Forward

For most investors, however, the DORK stocks serve as a cautionary tale. The lack of fundamental support, the reliance on social media-driven momentum, and the high volatility make these positions unsuitable for long-term strategies. As Mark Hackett of Nationwide notes, the broader market remains “calm and steady,” but the DORK rally is a sign of rising risk appetite—a double-edged sword that could lead to instability.

Investors should approach meme stocks with a clear plan, including strict stop-loss orders and position sizing that reflects the inherent risks. Diversification remains key: while the DORKs may offer short-term thrills, portfolios should prioritize companies with strong earnings, cash flow, and growth potential. The current environment also calls for vigilance regarding macroeconomic shifts, such as Trump's tariff policies and the Federal Reserve's stance on inflation, which could amplify volatility.

Conclusion

The DORK stocks and the 2025 meme stock resurgence are a testament to the enduring allure of speculative trading. They capture the tension between retail empowerment and market irrationality, offering both fleeting opportunities and significant risks. For investors, the lesson is clear: while the rush to chase the next “hot” stock can yield quick profits, it is a game of luck and timing rather than strategy. In a market increasingly shaped by retail-driven volatility, the wisdom of caution—rather than the seduction of momentum—may prove to be the most enduring investment principle.