Meme stocks, characterized by their popularity and high trading volume driven by social media communities, are surging again. The resurgence includes stocks like Krispy Kreme, which has seen a 40% increase. This renewed meme stock activity aligns with broader market gains and encourages speculative trading. Typically, meme stocks attract short sellers, and rising prices can trigger increased buying, which further drives up stock prices. Despite the short-lived nature of these rallies, the current environment is reminiscent of the 2021 GameStop phenomenon, marking a significant speculative move in 2025.
The stocks are usually a target of short sellers or those who bet against the stock. With the rising momentum, other investors join and start buying to boost the price, which prompts others betting against the stock to buy more to cover losses.
Krispy Kreme is a new meme stock, up 40% in five days. The better-than-expected tariff news brought a sigh of relief, and S&P closed at another record high yesterday.
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