Kohl's shares quickly rose in a 'meme-stock' rally. What to know.

USA Today

3 days ago

Kohl's Corp shares briefly doubled in value to a ten-month high of $21.23 on July 22, making it one of the most traded stocks on retail platforms. The chain became the latest 'meme stock,' as the surge in trading was driven by online discussions on platforms like Reddit's WallStreetBets.
Reuters reported that the volume of the Wisconsin-based company's stock caused a temporary halt in trading. The share price closed at approximately $14.34 per share, representing a 38% increase for the day.
The recent trading frenzy resembles the 2021 "meme stock" rally, marked by surges in stocks like GameStop and AMC Entertainment. Contributing factors included COVID-19 lockdowns, which increased savings, government stimulus checks and low interest rates that drove more investors into the stock market.
Here's what you need to know about the Kohl's 'meme stock' rally:
What are meme stocks?
A meme stock is a nickname for a company whose shares get a boost when retail traders rally around it on platforms such as Reddit, stocktwits.com and X to trigger a short squeeze, according to Reuters.
These companies are often facing losses, but meme stock traders love them for their cheap stock price.
WallStreetBets on Reddit has gained popularity as a forum for discussing the stock market and sharing stock recommendations. Often, those companies have a large amount of shares being shorted, which can lead to price increases and force hedge funds and other firms betting against these companies to take a sizable financial loss.
How much trading took place in Kohl's shares?
The average trading volume for Kohl's is roughly 8.7 million shares a day. However, on July 22, traders were moving as high as 190 million shares of stock.
Kohl's stock continues wild ride: CNBC's Cramer says 'something good' could come at company
What do experts say about meme stock trading?
David Swartz, analyst with Morningstar who monitors Kohl's, told the Milwaukee Journal Sentinel, part of the USA TODAY network, that Kohl's share price has been steadily increasing in recent months.
'It's been building for a while,' Swartz said. 'It has been building from its lows, and people started promoting it online.'
Swartz said the volume on July 22 was astronomically higher than usual. 'That will typically happen when there's a big move,' Swartz said. Those who bet against the stock likely lost money or had to buy more stock to cover their losses, he added.
Even with the stock's performance increasing in recent weeks, Swartz said he doesn't expect the trading frenzy to last.
Macy's and Bed, Bath & Beyond are examples of companies that have been caught up in the 'meme stock' rally, but neither company's future financial situation has changed.
Contributing: Ricardo Torres, Milwaukee Journal Sentinel; Reuters