Krispy Kreme and GoPro surge on memestock frenzy short interest fuels 39.5% and 91% weekly gains

Retail stocks Krispy Kreme (NASDAQ: DNUT) and GoPro (NASDAQ: GPRO) have emerged as the latest focal points in the speculative frenzy driving so-called "memestocks," attracting traders seeking outsized returns amid thin liquidity and high short interest. Both companies, trading below $5 per share, exhibit characteristics typical of assets prone to retail-driven volatility, though their fundamentals remain clouded by operational and structural challenges [1].

Krispy Kreme’s stock surged 39.5% weekly, reaching $4.38, despite a 72% decline from its July 2021 peak of $20.05. The company, with 24.16 million shares shorted (28.09% of float), faces structural risks including commoditization of its core doughnut product and high logistics costs. Q1 2025 earnings revealed a 401.4% year-over-year net loss of $33.4 million, alongside a $20.3 million operating loss, exacerbating concerns about its $18.7 million cash balance against $54.6 million in current liabilities. Analysts surveyed by WSJ recommend holding the stock, with an average price target of $4.10—slightly above the current $4.61 level—reflecting cautious optimism about cost-cutting measures and product diversification [1].

GoPro’s shares, meanwhile, climbed 91% to $1.52, outpacing its 52-week average of $1. The company’s 9.69% short interest (12.17 million shares) has not deterred speculative bets, despite a 13.6% sales drop in Q1 2025 and a $46.7 million net loss. The action camera maker’s struggles stem from smartphone competition, stagnant consumer demand, and supply chain relocations to Vietnam and Thailand. While recent legal victories against rival Insta360 over intellectual property claims have stabilized the stock, its $69.6 million cash position against $316.9 million in liabilities underscores liquidity risks. Speculation about a potential acquisition—fueled by past consultations with JP Morgan—has further amplified volatility [1].

The speculative appeal of DNUT and GPRO mirrors past memestock dynamics, driven by their low market caps, short squeezes, and retail trader coordination on platforms like Reddit. However, unlike GameStop’s Bitcoin treasury-driven revival, these companies lack clear catalysts for sustained recovery. Analysts note that while DNUT’s low debt-to-equity ratio (0.83) offers some margin for maneuver, both stocks remain vulnerable to earnings disappointments and macroeconomic headwinds. For GPRO, the path to profitability depends on navigating supply chain costs and regaining pricing power in a fragmented market [1].

Retail investors continue to balance the allure of quick profits with the risks inherent in highly leveraged, capital-intensive models. As institutional short positions remain elevated, the next earnings reports for both companies could trigger further swings, though structural challenges suggest any gains may be short-lived.

Source: [1] [High Risk, High Glaze: Memestock Mania Shifts to DNUT and GPRO] [https://coinmarketcap.com/community/articles/688254fb2c129e186ade4034/]