Meme stocks warning: Investing in Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT) and Kohl's (KSS) is like betting in Casio? Here's what experts are saying

"Meme stocks" fever is back in the US Stock market as Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT) and Kohl's (KSS) has become the meme stocks of the moment, along with a new moniker from traders -- "DORK," a reference to the first letters of their tickers. On Monday, for no singular reason, shares in a medley of beaten-down companies suddenly soared as small-time investors bought up stocks that mainstream Wall Street analysts and investors had long given up on. It got odder Tuesday, as that tsunami of trading intensified and the shares of four companies briefly doubled in value. But like the meme-stock craze of 2021, Monday's and Tuesday's inexplicable gains swiftly gave way to inexplicable losses. The apprehensions are now arising that

Meme Stocks Fall

On Wednesday, the aforementioned shares pulled back, and the moment acquired an unlikely twist of identity politics, with some online stock boosters praising Opendoor, the real estate platform, for being the first meme stock led by a female CEO. That historical footnote could not prevent the company's stock from dropping 20 per cent on the day.


In interviews with The New York Times and in online posts to investment message boards, traders partly credited the success of the buy-the-dip strategy, in which retail investors reflexively pile into stocks that have fallen in value.

Others pointed to the broad headiness in the market because the economic outcomes of President Donald Trump's tariffs haven't been as poor as feared.

Risk of Meme Stocks

Yet almost as certain as death and taxes, there is another good bet: The meme stock spotlight will move along, and the outcome is nigh predetermined. (Palantir, the online-favorite data company so sustainably popular that it sells branded $55 T-shirts, is a major exception.) In most instances, once curiosity shifts to the next shooting stock, shares in the previous one lose steam.

Wolfe Research called it a "junk rally" in a research note and warned that it included companies earlier identified on its "Hit List" of shorted stocks that were likely to disappoint. A trader at a multibillion-dollar New York hedge fund, asked how he was holding up, responded with a series of emoji including rocket ships -- the unofficial logo of wallstreetbets -- in a mocking nod to the weirdness of the moment.

For some, however, the siren call could not be ignored. Kevin Gao, ignored pressure from friends last week to buy stocks, chastened by his memory of losing $10,000 on a $40,000 investment in GameStop stock four years ago.

By Monday, though, impelled by screenshots posted to Reddit detailing other investors' profits, Gao went for it. He bought around $2,500 of Opendoor shares around midday, only to see the stock begin slipping five minutes later. Hoping for a rebound, he added $600, but the drop has only intensified.

"I literally felt like I went to the casino to put $2,500 on black roulette," said Gao, who lives in Las Vegas.

FAQs

Q1. What are meme stocks?
A1. Meme stocks are Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT) and Kohl's (KSS).

Q2. How are meme stocks performing?
A2. On Wednesday, the aforementioned shares pulled back, and the moment acquired an unlikely twist of identity politics, with some online stock boosters praising Opendoor, the real estate platform, for being the first meme stock led by a female CEO. That historical footnote could not prevent the company's stock from dropping 20 per cent on the day.