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Kohl’s Corp stock quickly doubled to its 10-month high of $21.23 on July 22, becoming one of the most traded stocks on the retail platform. The surge in trading was driven by online discussions on platforms such as Reddit’s Wallstreetbets, making the chain the latest “meme stock.”
Reuters reported that the amount of shares in the Wisconsin-based company caused a temporary halt in trading. The stock closed at around $14.34 per share, representing a 38% increase for the day.
The recent trading frenzy resembles the 2021 “Meme Stock” rally marked with stock surges such as GameStop and AMC Entertainment. Contributors include COVID-19 lockdowns, increased savings, government stimulus checks, and lower interest rates that have driven more investors into the stock market.
Here’s what you need to know about Cole’s “Meme Stock” rally:
What is Meme Stock?
Meme stocks are the nicknames of companies that boost stocks when retailers are outperforming stocks on platforms like Reddit, Stocktwits.com and X. According to Reuters.
These companies often face losses, but meme stock traders love them because of the low stock prices.
Wallstreetbets on Reddit has gained popularity as a forum for discussing the stock market and sharing stock recommendations. In many cases, these companies short-circuit large amounts of stock, leading to price increases, which can force hedge funds and other companies to suffer substantial economic losses against these companies.
How many transactions have been made on Cole’s stock?
Coles’ average trading volume is approximately 8.7 million shares per day. However, on July 22nd, traders had reached 109 million shares.
What do experts say about stock trading in memes?
Morningstar analyst David Swartz, who monitors Call, told the Milwaukee Journal Sentinel, part of the USA Today network, that Cole’s stock has been steadily rising in recent months.
“It’s been built for a while,” Swartz said. “It’s built from that low price and people started advertising it online.”
Swartz said the volume on July 22 was astronomically higher than usual. “It usually happens when there’s a big movement,” Swartz said. Those who bet on stocks either lost their money or had to buy more stocks to cover their losses, he added.
Even if stock performance has increased in recent weeks, Swartz said he doesn’t think the trading frenzy will continue.
Macy’s & Bed, Bath & Bead, are examples of companies that have been caught up in the “Meme Stock” rally, but the future financial situation of either company remains unchanged.
Contributions: Ricardo Torres, Milwaukee Journal Sentinel; Reuters
