The latest meme stock saga continued into Wednesday, with otherwise poorly performing stocks surging.
Meme stocks gain popularity among retail traders who typically congregate on r/WallStreetBets, the Reddit $RDDT forum where members orchestrated the GameStop $GME mania of 2021.
At market open, shares in wearable camera maker GoPro were up 60%, doughnut retailer Krispy Kreme rose 34%, and plant-based food producer Beyond Meat climbed nearly 14%.
Other recent meme stock darlings include online real estate service Opendoor Technologies and retailer Kohl’s. Opendoor’s share price hit an all-time high on Monday — capping a 473% surge since the start of July — before beginning to retract, shedding around 40% since the start of the week. Shares in Kohl’s doubled on Monday but have since given back about half of those gains.
Trading volume data illustrates the scale of the retail-led surge.
On Tuesday, call volume on Krispy Kreme exploded, with more than 100,000 contracts trading hands — equivalent to 71 times the average daily volume over the past four years, according to data compiled by Bloomberg. Likewise, GoPro saw its highest call volume since 2021, with over 56,000 contracts traded.
These stocks have surged in popularity despite no change in their underlying business prospects, Daniela Hathorn, senior market analyst at Capital.com, told Bloomberg.
Indeed, in true meme stock tradition, the recent targets have been some of Wall Street’s underdogs this year. Opendoor had been trading around $1 since the start of the year, having lost nearly all its value since its 2021 highs. As of June, GoPro and Krispy Kreme were down 43% and 73% respectively, while Beyond Meat was down 40% as of May.
There’s no precise formula for how retail traders decide which generally poor-performing stocks to pile onto.
“Krispy Kreme seems to be the latest addition to the frenzy,” Hathorn told Bloomberg in a note. “Like the others, there was no significant news to justify the rally — just sheer retail momentum.”
In the case of Opendoor, there appears to be a more traceable chain of events, beginning with an X $TWTR post by hedge fund manager Eric Jackson on July 15. Jackson’s firm, EMJ Capital, had bought Opendoor shares during the company’s post-IPO golden era in 2021, when it was valued at around $40 billion. So when Jackson shared that EMJ had taken a position in $OPEN, adding that the firm believes it could be a “100-bagger” over the next few years, it seems to have ignited a chain reaction.
On July 17, the ticker $OPEN appeared for the first time on r/WallStreetBets — the Reddit forum where retail traders orchestrated the GameStop frenzy of 2021.
Jackson embraces his reputation on X as “the Carvana hedge fund guy.” Online used car retailer Carvana has seen its shares skyrocket more than 7,600% since 2023. On X, Jackson claims that EMJ Capital’s “AI model” is wired to spot early signs of a Carvana 2.0 — a model he cites when flagging underweight stocks.