The Resurgence of Meme Stocks: Are Kohl's and Opendoor Technologies Worth the Hype?

In the summer of 2025, the stock market witnessed a familiar yet chaotic phenomenon: the rise of meme stocks. Kohl's Corporation (KSS) and Opendoor Technologies (OPEN) became the latest darlings of retail investors, surging by 39% and 500%, respectively, in a matter of days. These price spikes, reminiscent of the 2021 GameStop frenzy, were fueled by social media speculation, short squeezes, and a wave of bullish retail sentiment. But beneath the headlines lies a critical question: Are these stocks undervalued bargains, or are they the latest victims of a speculative bubble?

The Meme Stock Playbook

The surge in KSS and OPEN followed a predictable pattern. Both stocks had high short interest—Kohls at 49% and Opendoor at 63%—making them prime candidates for short squeezes. Retail investors, coordinated on platforms like Reddit's WallStreetBets and Stocktwits, drove up prices to force short sellers to cover their positions. For KSS, the rally began on July 22, 2025, when the stock opened at $19.53 (a 90% jump from the prior close of $10.41) before trading was halted. By the end of the day, it settled at $14.48, a 39% gain. Opendoor's stock, meanwhile, soared from below $1 to a high of $4.97 in July, driven by similar dynamics and a flurry of options trading at the $4.50 strike price.

The volume of shares traded for both stocks dwarfed historical averages. KSS saw 207 million shares traded in a single day—25 times its 25-day moving average—while OPEN's volume reached 1.9 billion, over 1,700% of its three-month average. These numbers underscore the power of retail-driven momentum, where sentiment often trumps fundamentals.

Fundamentals vs. Frenzy

To assess whether these surges were justified, we turn to the companies' financials.

Kohls (KSS):
- Revenue: Declined 4.1% year-over-year to $3 billion in Q1 2025, with comparable sales down 3.9%.
- Profitability: Operating income improved to $60 million (1.9% of revenue), but net losses persisted at ($0.13) per share.
- Debt: A debt-to-equity ratio of 1.95, worse than 84% of its retail peers, reflects significant leverage.
- Inventory: Inventory levels rose 2% to $3.1 billion, signaling ongoing challenges in demand management.

Kohls' long-term outlook remains bleak. The company projected a 5%-7% sales decline for 2025 and a bearish analyst consensus with a median price target of $8.00—well below the $14.48 peak. Despite modest margin improvements, the fundamentals suggest a company struggling to adapt to a competitive retail landscape.

Opendoor (OPEN):
- Revenue: Fell 2% to $1.2 billion in Q1 2025, with a net loss of $85 million.
- Profitability: Adjusted EBITDA improved to $(30) million, but contribution profit of $54 million was a marginal gain.
- Debt: A staggering debt-to-equity ratio of 4.08, with $2.63 billion in long-term debt and $645 million in shareholders' equity.
- Cash Flow: Negative $279 million in operating cash flow, driven by real estate inventory costs and operational losses.

Opendoor's business model—buying and reselling homes at scale—requires heavy capital. While the company's inventory grew 26% year-over-year to $2.4 billion, its ability to convert this into sustainable profits remains questionable. The recent rally appears disconnected from its financial reality.

The Value vs. Speculation Debate

The key question is whether these stocks represent value or are merely riding a speculative wave. For KSS, the rally might have been partly justified by a short squeeze and a modest improvement in operating margins. However, the stock's valuation (trading at over 10x sales) and weak fundamentals suggest little long-term appeal. For OPEN, the surge is even harder to rationalize. At a 500% increase from its $1 level, the stock trades at a premium to its $1.2 billion revenue but lacks the margins or growth to justify such a multiple.

Investor sentiment, however, tells a different story. Both stocks gained traction on social media, with KSS's CEO being fired earlier in 2025 for a personal relationship with a vendor—a scandal that further eroded investor confidence. Retail traders, viewing this as a “David vs. Goliath” narrative, flocked to KSS, while OPEN's real estate angle and high short interest made it a meme stock magnet.

Conclusion: Hype or Opportunity?

For value investors, the answer is clear: These stocks are not bargains. Kohls and Opendoor are burdened by debt, declining sales, and structural challenges in their industries. The recent price surges were driven by speculative momentum, not fundamentals. While short-term traders may profit from further volatility, the long-term risks are substantial.

That said, the meme stock phenomenon highlights the power of retail sentiment in modern markets. Investors who recognize the difference between hype and value can avoid costly mistakes. For now, KSS and OPEN remain cautionary tales of speculation overriding analysis. As one Wall Street analyst put it, “Meme stocks are a lottery ticket—sometimes you win, but you're always playing against the odds.”

In a market where retail trading platforms and social media amplify every rumor, the line between value and speculation grows thinner. For investors, the lesson is to stay grounded in fundamentals—even when the crowd is cheering.