The fever in financial markets over “meme stocks” is back and stranger than ever.
Just how strange?
So strange that 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 on Tuesday, as that tsunami of trading intensified and the shares of four companies briefly doubled in value.
Krispy Kreme (DNUT), Opendoor (OPEN), Rocket Mortgage (RKT) and Kohl’s (KSS) had become the meme stocks of the moment, along with a new moniker from traders — “DORK,” a reference to the first letters of their tickers.
But like the meme-stock craze of 2021, Monday’s and Tuesday’s inexplicable gains swiftly gave way to inexplicable losses.
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 chief executive. That historical footnote could not prevent the company’s stock from dropping 20 percent on the day.
It is at once familiar and all new. The power of small investors to send Wall Street spinning has been well demonstrated since the pandemic, when a mix of online trading tools, low interest rates and boredom incited the first meme mania.
In 2021, it was a different slew of struggling companies (AMC Entertainment, GameStop and BlackBerry, among others) that became day-trader darlings before their share prices snapped back down to earth.
Named for a meme, an online trend, the phenomenon was first considered a bit of a joke among the big-money set because it grew out of internet forums, such as Reddit’s “wallstreetbets,” and fueled almost random but intense gyrations in stock prices.
Professional investors, however, quickly took it seriously when these “retail” traders banded together to bid up stocks that hedge funds were shorting, or betting against, producing a series of “short squeezes” that went so far as to send one wealthy trader, Gabe Plotkin, into early retirement in 2022.
The past few weeks of stock buying by individual investors was the heaviest since that original 2021 run, Citadel Securities said. Similar to then, this week’s trading has included a bit of nerdiness and braggadocio, with traders egging one another on with catchphrases such as “DNUT YOLO” and “HODLTHE($OPEN)DOOR.”
Like prior sprees, this week’s sequel has centered on heavily shorted stocks. Yet the exact impetus for why these four stocks and why this particular week remains foggy.
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 Trump’s tariffs haven’t been as poor as feared.
In the case of Opendoor, several investors pointed to a series of recent posts from a small Canadian hedge fund manager, Eric Jackson, extolling the company. Mr. Jackson said in an interview that he welcomed the credit (“I don’t take offense”) but didn’t want Opendoor compared with the other members of “DORK,” which he described with an expletive.
“OPEN has inspired the rest, but OPEN is a real business,” he said.
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 emojis 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, 29, 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, Mr. 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 Mr. Gao, who lives in Las Vegas.
He soon shut off his phone, went to the gym (leg presses, squats and dozens of laps in the pool), prayed and read the Bible. He has done that a second time since then, hoping to keep himself from jumping back into this strange market.
Rob Copeland is a finance reporter for The Times, writing about Wall Street and the banking industry.
Kailyn Rhone is a Times business reporter and the 2025 David Carr fellow.
The post The Stock Market’s Most Unserious Season Is Back and Dorkier Than Before appeared first on New York Times.
