The Meme Stock Resurgence: Opendoor and Krispy Kreme Lead a New Wave of Retail Investor Frenzy

In July 2025, the stock market witnessed a striking resurgence of meme stock mania. Opendoor (OPEN) and Krispy Kreme (DNUT) have become the latest darlings of retail investors, with their shares surging on social media-driven speculation, short-covering rallies, and the explosive popularity of zero-day-to-expiration (0DTE) options. But as these stocks defy fundamentals and soar on hype, a critical question looms: Can this frenzy sustain itself in a macroeconomic climate far less forgiving than 2021?

The Mechanics of the Rally

Opendoor's 440% surge in July 2025 was ignited by a tweet from hedge fund manager Eric Jackson, who labeled the stock a “$82 target” after comparing its turnaround to Carvana's 2023 recovery. The stock's price skyrocketed from $0.51 to $4.71 in just weeks, despite the company's stagnant revenue and lack of material business updates. Similarly, Krispy Kreme (DNUT) rallied 28% in a single day on July 22, followed by a 34.4% premarket surge the next day, despite being down 55.4% year-to-date.

The catalyst? Retail-driven short squeezes. Both stocks have high short interest—Krispy Kreme at 28.1% of its float—and retail traders coordinated on platforms like Reddit and Stocktwits to flood the market. Trading volumes tell the story: Opendoor's 2 billion shares traded in July 2025 dwarfed its 100-day average, while Krispy Kreme's 152 million shares on July 23 marked a 400x spike.

The Role of 0DTE Options

The 2025 meme stock boom is no accident—it's engineered by the rise of 0DTE options, which now account for 61% of S&P 500 options volume. These daily-expiration contracts allow traders to amplify bets on short-term volatility. For example, a $100 investment in a 0DTE call option on Krispy Kreme could yield 50x returns in a single day if the stock gaps up.

Retail participation in 0DTE options has surged, with estimates suggesting 50–60% of trading activity comes from individual investors. This creates a self-fulfilling prophecy: as more traders buy 0DTE calls, the stock price rises, triggering further short covering and FOMO-driven buying.

However, the risks are stark. A 0DTE put on a meme stock can erase capital in minutes if sentiment shifts. For instance, Opendoor's 28% drop on July 23—despite no news—was fueled by profit-taking and short sellers re-entering the market.

Macro Headwinds and Institutional Caution

Unlike 2021, when pandemic-era liquidity buoyed speculative bets, 2025's macroeconomic environment is a minefield. Higher interest rates, resuming student loan payments, and a fragile job market constrain retail investors' risk appetite. Meanwhile, the S&P 500's 22.5 forward P/E ratio suggests the broader market is already priced for perfection, leaving little room for meme stocks to thrive if a correction hits.

Institutional investors remain skeptical. Hedge funds like Martin Shkreli's firm have begun shorting meme stocks or betting against their sustainability. “The 2025 rally is a 'hype trade' on steroids,” one analyst noted. “These stocks have no earnings, no growth, and no catalysts—just retail momentum. That's a recipe for a crash.”

Key Risks and Opportunities

1. Short Interest Dynamics: While high short interest can fuel rallies (e.g., Krispy Kreme's 28.1%), it also invites aggressive short sellers to defend their positions. A sudden influx of short covering could reverse trends overnight.
2. Fundamental Weakness: Opendoor's beta of 2.16 and Krispy Kreme's 78% decline since 2021 IPO underscore their vulnerability. Without earnings or revenue growth, these stocks lack a floor.
3. Retail Fatigue: Meme stock momentum is fragile. Once the social media buzz fades (as seen with Opendoor's 20% drop in late July), panic selling could follow.

Investment Advice: Proceed with Caution

For investors, the meme stock resurgence offers a mix of high-risk, high-reward opportunities. Here's how to navigate it:
- Short-Term Play: For experienced traders, 0DTE options on high-short-interest names like OPEN or DNUT could yield quick profits if sentiment remains bullish. But cap risk exposure—these bets are akin to lottery tickets.
- Long-Term Avoidance: Meme stocks are inherently speculative. Investors seeking long-term value should steer clear unless a company demonstrates tangible business improvements (e.g., Opendoor's Q2 earnings on August 5 could provide clarity).
- Diversification: Even in a “risk-on” environment, allocate meme stock exposure to a small portion of your portfolio. The potential for a GameStop-style collapse remains real.

Conclusion

The 2025 meme stock rally is a testament to retail investors' growing influence—and their willingness to challenge traditional market norms. Yet, history shows that speculative frenzies often end in tears. While Opendoor and Krispy Kreme may continue to ride the wave of social media hype, their sustainability hinges on a fragile balance of retail sentiment and macroeconomic stability. For now, the party is on, but the music could stop at any moment.

As one Wall Street strategist put it: “Meme stocks are the new casino. The house always wins—but not before it burns through the chips.”