Remember when your weird cousin made a fortune on GameStop and wouldn’t shut up about it at Thanksgiving? Well, the meme stock circus is back in town, and this time it’s got a new cast of characters with an even better acronym: the DORKs.
We’re talking about Opendoor, Kohl’s, Krispy Kreme, and GoPro – companies that somehow became the darlings of Reddit traders this week. Opendoor shot up a mind-melting 473% in three weeks before reality came knocking. Kohl’s spiked 87% on Tuesday (because apparently someone really, really loves department stores), and Krispy Kreme joined the party because… donuts?
But here’s the thing: by Wednesday, the party was already over. Opendoor crashed 20%, Kohl’s dropped 14%, and Krispy Kreme fell 27%. It was like watching a sugar rush followed by the inevitable crash – fitting, given one of the stocks literally sells sugar.
What’s Really Going On Here?
According to the smart money folks, this latest meme stock episode is telling us two important things about where we are in this market cycle.
First, everyone’s feeling a little too good about themselves. When people start throwing money at companies they haven’t thought about since 2019 (looking at you, GoPro), that’s usually a sign that investor sentiment has reached “euphoric levels.” It’s like when your most conservative friend starts talking about crypto – time to pay attention.
These aren’t exactly blue-chip darlings we’re talking about. Opendoor lost $392 million last year with revenue down 26%. GoPro? Down 20% in revenue with a $432 million loss. As one strategist put it, these are “companies that are, if not broken, certainly disabled.” Ouch, but fair.
Retail investors have been on an absolute tear this year, buying $155.3 billion worth of stocks in the first half – the most in at least a decade. When regular folks are this bullish, it usually means we’re getting close to some kind of peak.
But here’s the plot twist: this might not be the warning sign you think it is.
Unlike the 2021 meme stock mania that preceded the brutal 2022 bear market, this time feels different. The broader market isn’t just running on hopium and stimulus checks. We’ve got actual fundamentals backing things up:
- 83% of S&P 500 companies are beating earnings estimates
- Trump’s making trade deals instead of starting trade wars
- The job market is holding up better than expected
Think of it this way: the DORKs are like that one friend who gets way too drunk at the party while everyone else is having a good time responsibly. Their antics are entertaining (and slightly concerning), but they don’t necessarily mean the whole party is about to get shut down.
The Bottom Line
This meme stock revival is more noise than signal. Sure, August and September are historically rough months for stocks, so we might see some choppiness ahead. But unlike 2021, when everything felt like it was built on a foundation of memes and dreams, today’s market has some actual substance underneath all the speculation.
So while the DORKs provided some entertainment this week, don’t let their wild ride distract you from the bigger picture. Sometimes the sideshow is just that – a sideshow.