Kohl’s Skyrockets as Stock Becomes Traders’ Latest Meme Darling

Kohl’s Corp. shares posted a record one-day gain Tuesday, minting it as the newest meme stock, amid an influx of mentions by retail traders on social media.

The retailer’s stock price soared 38 percent to close at $14.34 after a wild day of trading that saw the shares more than double at an intraday peak. Trading was briefly halted for volatility after the stock pared its gains. Before Monday, the shares had been trading in the single digits since March 11.

“It’s all social media chatter,” said Steve Sosnick of Interactive Brokers. “Remember that a highlight of the meme stock era was a dose of nostalgia for companies like GameStop and AMC. Social media chatter can become self-fulfilling.”

A Kohl’s spokesperson didn’t immediately respond to a Bloomberg News request for comment.

A short squeeze is a potential culprit for the moves. About 48 percent of Kohl’s float is sold short, meaning it’s being used to bet against the stock price, according to data from S3 Partners LLC. GameStop Corp., a darling of the meme stock era, has a short interest of about 20 percent, and for tech giants like Apple Inc. and Tesla Inc. it’s less than 3 percent. A short squeeze happens when heavily shorted shares suddenly rise, forcing traders to quickly cover those positions.

Kohl’s has risen steadily since an April swoon triggered by President Donald Trump’s sweeping tariffs, picking up more than 60 percent through yesterday’s close. But it was still down more than 25 percent for the year through Monday. 

The company fired its former chief executive Ashley Buchanan in May after just a few months on the job, when the board determined that he directed millions of dollars of business to Chandra Holt, with whom he was having a relationship that he didn’t disclose. Buchanan and Holt were executives together at Walmart Inc. and its Sam’s Club division, according to a Bloomberg News report.

Under Buchanan, the company cut 10 percent of its corporate jobs and morale slumped, with its chief people officer declaring that employee engagement was at its lowest in more than 15 years, according to a recording of a company meeting viewed by Bloomberg News. Meanwhile, sales have declined for more than three years as the company has struggled to identify areas to focus that will attract shoppers.

Familiar Price Action

The price action in Kohl’s shares is familiar to anyone who witnessed the Covid meme-stock frenzy, with retail traders bidding up a struggling stock to put pressure on short sellers.

Speculative trading may be gaining steam with the S&P 500 and Nasdaq 100 indexes near records, prompting retail investors too look for other parts of the stock market to make a quick buck. A flight to lower-quality names also boosted shares of Opendoor Technologies Inc., which climbed as much as 121 percent intraday Monday before paring gains. 

A flurry of bullish options bets on Kohl’s were placed Monday, with call volume 362 percent above average, according to data compiled by Bloomberg. That’s similar to the trading in Opendoor, where a heave of call buying also triggered a frenzied rally in the stock.

Other heavily shorted names are attracting buyers Tuesday, including Aehr Test Systems, Polaris Inc., Campbell’s Co., Carter’s Inc. and Wendy’s Co.

“Kohl’s ripping is straight out of the 2021 meme-stock script,” said Dave Mazza, chief executive officer at Roundhill Investments. “When a bruised department store can ‘moon’ on positioning rather than profits, it’s proof that pockets of this market are running on FOMO and liquidity, not fundamentals, as investors continue to look for outsized gains.”

By Carmen Reinicke

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