Kohl’s shares had their own precipitous surge, rising almost 38% in a day as they became the latest victim of the meme stock mania. The department store giant’s stock doubled momentarily in intraday trading, reaching $21.39—its highest point in close to a year. The sudden spike mirrors the same move in other short-high-interest stocks, such as Opendoor Technologies, which also recently bounced back as retail investors returned with ferocity.
The dramatic abrupt increase in Kohl’s stock price was fueled primarily by social media frenzy, where retail investor trading platforms and Reddit boards fueled buy suggestions.
As short interest in Kohl’s approached 50% of the float, the setup was being created for a short squeeze—a hallmark of meme stock rallies. Volume exploded above 184 million shares, overwhelming the stock’s average daily volume decline of 9 million.
Market strategists and analysts warned that the price action is without any underlying support. Amidst the price action, Kohl’s still faces major operational challenges like declining sales, management reshuffles, and tough competition from massive retailers like Walmart and Amazon. The firm has recently ousted its CEO amidst mounting company-level investigations, further fuelling investor uncertainty.
Behavioral finance authorities characterize this as a quintessential case of herd trading, with individual investors piling into heavily shorted stocks in an expectation of profiting quickly. Volatility is reflective of increased speculation in the market, especially in a broader context where technology stocks and crypto are trading all-time highs. Some analysts have termed this trend a “mini-bubble,” with significant similarity to earlier meme stock rallies such as GameStop and AMC.
Short sellers lost around $260 million worth of intraday positions on the rally in Kohl’s, it was reported. As retail traders again demonstrated their potency, meme stock mania would seem to be back, if only most analysts are skeptical. Kohl’s long-term future plans remain unclear, but the company at least regained center stage—more due to social momentum rather than strategic expansion.
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