Krispy Kreme joins the meme-stock party. Tech and crypto strength may be fueling the wave, analyst says

By James RogersThe latest meme-stock frenzy shows that 'market psychology and crowd behavior can sometimes matter more than the numbers,' says one analystKrispy Kreme Inc. has joined Opendoor Technologies Inc. and Kohl's Corp. in the latest meme-stock wave as shares of the doughnut maker skyrocket amid a wild week for the names.Shares of heavily-shorted Krispy Kreme (DNUT) are up 4.5% in afternoon trading, paring gains after soaring 34.4% premarket. The stock ended Tuesday's session up almost 27%. Kohl's (KSS) stock surged as much as 105.3% on massive trading volume Tuesday before paring gains, just a day after Opendoor (OPEN) rose more than 120% intraday, lifted by a surge in volume and activity in options contracts.The latest surge in Krispy Kreme's stock underscores how meme-stock dynamics remain alive and well, driven more by investor enthusiasm and positioning than corporate performance, said Daniela Sabin Hathorn, senior market analyst at Capital.com."Krispy Kreme seems to be the latest addition to the frenzy," Sabin Hathorn wrote in a note released Wednesday. "Like the others, there was no significant news to justify the rally - just sheer retail momentum," she added. "The move underscores how meme-stock dynamics remain alive and well, driven more by investor enthusiasm and positioning than corporate performance."Short interest as a percentage of Krispy Kreme's public float of shares is 28.1%, based on the latest exchange data. In comparison, short interest as a percentage of float is 21.4% for Opendoor and 49.3% for Kohl's. For original meme stock GameStop Corp. (GME), short interest is 18.9% of the float.The movement in Krispy Kreme's stock this week is a stark contrast to its performance in recent months. In May, Krispy Kreme shares suffered their worst day since the company's return to the public markets in July 2021, weighed down by disappointing earnings. Krispy Kreme shares are down 55.4% in 2025.In her note, Sabin Hathorn said that the resurgence of meme-stock trading can be attributed to several factors."First, retail trading forums and social platforms have once again become engines of crowd momentum," she wrote. "Second, these stocks are all heavily shorted, setting the stage for violent short squeezes when buying pressure ramps up."Lastly, the analyst highlighted the current market environment where tech stocks are strong and crypto markets are rebounding. This, she says, has encouraged a "risk-on mindset, emboldening retail traders to dive into speculative plays."Bitcoin (BTCUSD) hit an all-time peak of more than $123,000 earlier this month.In 2021 a meme-stock feeding frenzy famously sent shares of AMC Entertainment Holdings Inc. (AMC) and GameStop skyrocketing, fueled by chatter on social-media platforms such as Reddit Inc. (RDDT) and the influence of trader Keith Gill, also known as Roaring Kitty. Meme stocks were thrust into the spotlight again last year amid Gill's return to social media. However, the trader has been quiet for most of 2025 - his last cryptic post on X, formerly Twitter, was on Jan. 22.Capital.com's Sabin Hathorn notes that the meme-stock risks are just as stark as the rewards. "These surges are often disconnected from company fundamentals and can reverse violently," she wrote. "Traders who chase momentum without an exit strategy may be caught in painful drawdowns. History shows that meme stock rallies are often brief and brutal-spectacular on the way up, and just as quick to unravel."Digital-camera maker GoPro Inc. (GPRO) also appeared to be caught up in the meme-stock wave Wednesday, with its shares climbing more than 20% on no apparent news, after running up 41% on Tuesday. Meanwhile, 9.7% of GoPro's float is shorted.Opendoor's stock is down 19.6% in afternoon trading, while Kohl's shares are down 15.3%."Whether this is the start of a sustained retail-driven rally or just another brief flare-up remains to be seen," the analyst added. "Either way, it's a powerful reminder that market psychology and crowd behavior can sometimes matter more than the numbers."Tomi Kilgore and Joseph Adinolfi contributed.-James RogersThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.