Kohl's shares briefly double, as meme stock mania makes a comeback
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Shares in department store chain Kohl's surged as much as 105% Tuesday in what appeared to be a social media-driven short squeeze.
Why it matters: It may mark the return of meme stock mania —but also another potential sign that this market rally may be getting out of hand.
By the numbers: Kohl's shares closed at $10.42 Monday and peaked at $21.39 at the open Tuesday. They were still up more than 30% at mid-morning.
- The rally comes as Kohl's is facing significant short interest, meaning investors have been betting against the success of the company.
- 49% of the stock's float is sold short, which means nearly half of the shares in the company that are available for trading are being bet against.
- Trading was halted due to volatility.
What they're saying: "Meme stocks are back," Jay Woods, chief global strategist at Freedom Capital Markets, tells Axios — especially given that there's no apparent reason for the stock price to have surged this much.
- On a fundamental basis, the retailer has struggled to increase profits, closing stores and cutting staff amid a broader department store downtrend.
- The majority of Wall Street analysts have hold or sell ratings on the stock.
Catch up quick: Today it's Kohl's. Yesterday, it was OpenDoor.
- OpenDoor Technologies, a real estate tech startup, saw its shares up by over 70% on Monday thanks to what appears to be retail demand.
- The stock is now up over 180% over the last 5 days.
Be smart: Meme stock investing activity hasn't rebounded to its peak 2021 levels.
- That's when stimulus checks, combined with time at home to trade and monitor Reddit threads, led to a boom in retail trading activity.
- Since then, retail sentiment has gained more legitimacy, particularly following the April tariff-driven volatility, which saw hedge funds flee the market and retail traders stay invested.
The bottom line: The recent market rally could be fueling a return to riskier trading activity, including potential short squeezes like the one Kohl's may be experiencing.
