This is why meme stocks have ‘bubbled back to the surface,' fund manager says

Meme stock activity is resurfacing, driven by persistent underlying factors from the 2021 phenomenon, according to Leuthold Group. This recent frenzy saw heavily shorted names like Opendoor Technologies (OPEN) surge over 120% intraday on July 21, alongside significant gains in Kohl’s Corp. (KSS) and Krispy Kreme Inc. (DNUT), signaling renewed retail speculative interest and potential market volatility.

Analysis

A recent resurgence in meme-stock activity indicates that the underlying speculative drivers from the 2021 phenomenon persist, according to analysis from Leuthold Group. This is characterized by targeted, high-volume buying in heavily shorted equities, leading to significant price dislocations. The most prominent recent example is Opendoor Technologies (OPEN), which saw its shares climb over 120% intraday on July 21. Similar speculative rallies were observed in shares of Kohl’s Corp. (KSS) and Krispy Kreme Inc. (DNUT). While the overall market sentiment signal is neutral, the per-ticker sentiment for these specific names is strongly positive (OPEN: 0.9; KSS: 0.8; DNUT: 0.8), reflecting the intense, isolated nature of these rallies. The activity underscores a market dynamic where retail investor sentiment and positioning in stocks with high short interest can create extreme volatility, largely detached from fundamental valuation.

Key Decisions for Investors

• Investors should recognize that the price action in stocks like OPEN, KSS, and DNUT is driven by speculative retail flows and short-squeeze dynamics, not fundamental catalysts, implying a high risk of sharp reversals.
• Traders holding short positions in names with high retail interest should reassess their risk management, as the renewed potential for coordinated buying campaigns can lead to significant, rapid losses.
• For those considering exposure, any position should be viewed as highly speculative; monitoring real-time sentiment and short interest data is critical, but extreme volatility requires disciplined entry and exit strategies.