'Meme Stock' Phenomenon Spreads on U.S. Stock Market... GoPro and Krispy Kreme See Sharp Swings

Concerns Rise Over Repeat of the "GameStop Phenomenon"
Retail Investors Flock to Meme Stocks Amid Volatile Swings

There are growing concerns that the surge of retail investor funds into "meme stocks"?stocks that gain popularity among individual investors through online buzz?on the U.S. stock market may be leading to a repeat of the GameStop phenomenon that heated up the New York Stock Exchange in 2021.

AP Yonhap News

On July 23 (local time) in New York, GoPro, a portable camera equipment company, closed at $1.54, up 12.41% from the previous session. As recently as July 21, GoPro was a "penny stock" trading below $1, but during the session, its price soared to $2.37, marking an intraday increase of 73% compared to the previous close. However, the stock failed to maintain this early momentum, gave up much of its gains, and displayed highly volatile price swings.

Krispy Kreme, a donut franchise, surged nearly 40% at the opening compared to the previous session, but also failed to sustain its upward trend and ultimately closed at $4.32, up 4.6% from the previous session.

Since neither company made any significant positive announcements, some analysts believe that retail investors have started to concentrate their buying on these stocks in opposition to short selling by Wall Street institutional investors. In fact, numerous posts mentioning GoPro and Krispy Kreme appeared in the "WallStreetBets" stock discussion forum on Reddit, a site frequently visited by U.S. retail investors.

The previous day, the well-known U.S. department store chain Kohl's became a target for retail investors and closed up 38%. On July 23, however, Kohl's plunged 14% by the close, displaying the typical behavior of a "meme stock."

Both inside and outside Wall Street, there are concerns that the so-called GameStop phenomenon that heated up the New York Stock Exchange in 2021 may be repeating itself. The GameStop incident began in early 2021, when U.S. retail investors, organized primarily through Reddit's WallStreetBets forum, began buying up GameStop shares to counter short selling by Wall Street institutional investors. As a result, GameStop's stock price skyrocketed, causing some hedge funds that had shorted the stock to suffer massive losses and even liquidate their funds.

Wall Street is paying close attention to the increase in such speculative activity, especially as the S&P 500 index continues to hit record highs despite ongoing uncertainty over tariff policies. The previous GameStop phenomenon also occurred during an exceptionally strong bull market on the New York Stock Exchange amid the pandemic in 2021.

In an investor note, Wolfe Research analyzed, "With the passage of the large-scale tax cut and spending bill known as the 'One Big Beautiful Bill,' downside risks to growth have been removed. Multiple rate cuts by the Federal Reserve are expected by year-end, economic indicators have been stronger than anticipated, and tariff news has not been as negative as feared. We believe these factors are also driving the early-stage rally in speculative-grade bonds."