Meme Stock Mania 2.0: The Strategic Case for Short Squeeze Opportunities in GoPro and Krispy Kreme

In the summer of 2025, the market witnessed a resurgence of meme stock fervor, this time targeting two unlikely candidates: GoPro (GPRO) and Krispy Kreme (DNUT). While these stocks have long been dismissed as "value traps," a confluence of retail-driven volatility, short interest dynamics, and technical momentum has created a fertile ground for short squeeze scenarios. This article dissects the interplay of these factors to identify actionable high-risk/high-reward trade setups.

Short Interest as a Catalyst

Short interest data paints a stark picture. GoPro has 12.17 million shares shorted, or 9.46% of its float, with a days-to-cover ratio of 3.0. While this suggests moderate bearish sentiment, the 12.5% decline in short interest since June 2025 hints at a waning bearish conviction. Krispy Kreme, however, is in a different league: 24.16 million shares shorted (28.08% of float) and a days-to-cover ratio of 6.07, indicating entrenched pessimism. This imbalance creates a higher potential for a short squeeze in DNUT should the stock rally, as short sellers face greater pressure to cover.

Technical Momentum and Retail Sentiment

Technical indicators for GoPro tell a bullish story. An RSI of 68.15 (neutral to overbought), a MACD divergence favoring buyers, and moving averages (5-day, 20-day, 50-day) below the current price all signal strength. The stock's 45% surge in early July 2025—spurred by an ITC ruling protecting its IP against Insta360—was accompanied by a 56,000-call-volume spike, the highest since 2021. Retail sentiment on Stocktwits shifted to "extremely bullish," a rare signal in a stock that had traded as a penny stock for years.

For Krispy Kreme, the technical picture is mixed. An RSI of 55.80 (neutral) and a 12.03% price ROC suggest upward momentum, but longer-term moving averages (100-day and 200-day) remain above the current price, creating sell signals. The stock's 18% intraday surge in July 2025 was driven by meme-stock enthusiasm, with call volume hitting 100,000 contracts—71 times the four-year average. However, the stock's fundamentals remain weak, with a 73% year-to-date decline and a class-action lawsuit clouding its outlook.

Fundamental Triggers and Strategic Implications

GoPro's Q1 2025 earnings report, while showing a 14% revenue decline, revealed a 26% reduction in operating expenses and a 5% rise in subscription ARPU. Management's optimism about new products (e.g., the Anamorphic Lens Mod) and a favorable ITC ruling in July 2025 provided a catalyst for retail traders. Meanwhile, Krispy Kreme's partnership with McDonald's ended in July 2025 amid unprofitable sales, triggering a 7% single-day drop. The company's pivot to international franchising lacks a clear path to profitability, making its rally purely speculative.

The Meme Stock Playbook: Risks and Rewards

For GoPro, the strategic case for a short squeeze hinges on its improving fundamentals and retail-driven momentum. A breakout above the $1.09 resistance level could trigger a 15%+ rally, forcing short sellers to cover. However, the stock's 43.5% year-to-date decline underscores its volatility. Notably, historical data shows that GPRO has faced a resistance level of $0.82 since 2022—a barrier it repeatedly tested before ultimately surging 54.38% despite the headwind, demonstrating persistent buying pressure.

For Krispy Kreme, the higher short interest (28.08%) amplifies the squeeze potential, but the stock's lack of fundamental support increases downside risk.

Investment Advice

1. Position Sizing: Given the high volatility, limit exposure to 1-2% of a portfolio for GPRO and 0.5-1% for DNUT.
2. Entry Points: For GPRO, consider a breakout above $1.09 with a stop-loss below $0.85. For DNUT, look for a pullback to $2.80 (below its 52-week high of $3.89) with a stop-loss at $2.50.
3. Risk Management: Use trailing stops to lock in gains as technical indicators (e.g., RSI overbought levels) suggest exhaustion.
4. Event-Driven Catalysts: Monitor GoPro's ITC ruling in July and Krispy Kreme's class-action lawsuit resolution on July 15 for potential short-term triggers.

Conclusion

Meme Stock Mania 2.0 is not a blind bet but a calculated play on market psychology and short interest dynamics. GoPro and Krispy Kreme offer contrasting opportunities: the former balances improving fundamentals with retail fervor, while the latter relies entirely on speculative momentum. Investors must weigh the risks of a short squeeze against the fragility of these stocks' underlying businesses. For those willing to navigate the turbulence, the rewards could be substantial—but only for those who enter with discipline and a clear exit strategy.

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