Krispy Kreme Stock Surges 9% Amid Meme Stock Frenzy Despite Financial Losses

Retail investors are gravitating toward Krispy Kreme, alongside other companies like GoPro and Beyond Meat, in what appears to be a revival of enthusiasm for meme stocks. Krispy Kreme, an iconic name in the doughnut industry, experienced a notable rise as its stock surged 9% on a recent Wednesday, following a 26.7% gain the previous day. Despite the company’s falling profits and revenue over several years, it has become a focal point for investors amidst a broader meme stock frenzy. Wall Street holds a dim view of Krispy Kreme's 2025 prospects, anticipating continued financial losses. The company recently retreated from providing a financial forecast for the year as it reevaluates its strategic partnerships, such as the one with fast-food giant McDonald’s.

This surge in Krispy Kreme’s stock comes in a wave of investor interest in traditionally underperforming companies, similar to past instances with household names like GameStop and BlackBerry. Krispy Kreme shares the spotlight with GoPro and Beyond Meat in this speculative investment activity. GoPro, a once-dominant player in the market for action cameras, saw its stock jump 35% on a Wednesday following a 41% increase the previous day. Analysts forecast that GoPro may manage a slight profit in 2025, even as it navigates intensifying competition and a dip in revenue that has persisted for several years.

Beyond Meat also surged, with a Wednesday gain of 9%, contributing to a weekly climb of over 30%. Despite this, the company has yet to achieve an annual profit since its IPO in 2019. Beyond Meat's management points to "elevated levels of uncertainty" affecting its outlook, prompting the withdrawal of its financial guidance for 2025. Investors currently involved are betting on the continuation of momentum, but meme stocks are known for their volatile nature, which can lead to swift changes in favor.

Alongside Krispy Kreme, former meme stock favorites like Kohl’s and Opendoor Technologies have witnessed contrasting fortunes. Kohl's faced a reversal, declining roughly 16% on the same day Krispy Kreme surged, after initially gaining 36% earlier in the week. The challenges facing Kohl's include frequent changes in executive leadership and persistently weak sales figures. Meanwhile, Opendoor Technologies, a company navigating the difficult housing market, saw its shares fall by 25%, reverting to levels before a spree of gains propelled by social media attention from figures such as hedge fund manager Eric Jackson.

The phenomenon of meme stocks, typified by retail investor enthusiasm often driving significant stock price shifts, can trace its roots to GameStop’s meteoric rise in 2021. That episode began with activist investor Keith Gill, widely known as “Roaring Kitty,” who encouraged mass buying of the company’s shares as institutional investors bet against it. The extreme trading activity briefly lifted GameStop's stock from under $5 to over $120, though it has since stabilized and trades at lower levels today. Such speculative surges can temporarily alter a stock's trajectory but often fade, as observed historically with Blackberry and others.

While Krispy Kreme capitalizes on current market conditions defined by meme stock buying trends, its ability to maintain investor interest amid financial challenges remains to be seen. Analysts continually caution that heightened trading activity and share price spikes seen in meme stocks may signify broader market susceptibilities. As the financial landscape evolves, Krispy Kreme and its peers serve as examples of the unpredictable dynamics of meme stock ventures—a territory where hype can prevail regardless of traditional financial assessments.