Kohl’s Shares Surge on Reddit‑Fueled Short Squeeze Frenzy
Kohl’s (NYSE: KSS) shares skyrocketed Tuesday after Reddit investors and short‑interest traders ignited a meme‑stock rally, triggering multiple volatility halts. The stock more than doubled in early trading, peaked near $21.23, and ultimately settled with gains of roughly 35–40% by day’s end.
What Caused the Surge?
The catalyst? Massive short interest—nearly 49% of Kohl’s free float, translating to approximately 53 million shares borrowed and sold short. As retail investors on r/WallStreetBets and related forums piled in, the stock’s sharp move forced short sellers into covering positions, further amplifying the rally—a classic short squeeze scenario.
Intra‑day trading volumes exploded—about 183 million shares traded by early afternoon, roughly 20–25 times the average. Options activity surged too, with nearly 360,000 contracts changing hands, including a flurry of calls betting on gains above $17.50 by Friday.
Meme‑Stock Mania Returns
Fundamentals vs. Speculation
Despite the explosive gains, analysts remain skeptical. Kohl’s has been grappling with declining sales, CEO turnover (including the ouster of Ashley Buchanan in May), and a dividend cut. UBS and Goldman Sachs maintain conservative price targets ranging from $4–$7, far below the current post‑spike price.
“Kohl’s has a lot of (fundamental) issues… yet this kind of crazy group move up just exemplifies what's happening with the retail investor...”
Risks and Outlook
While the rally could continue short-term—especially if more shorts are forced to exit—history shows meme‑stock rallies often reverse sharply once momentum fades. Trading halts may recur as volatility remains elevated.
Potential upsides include real estate asset value (Kohl’s owns many store sites) and free‑cash‑flow power. However, persistent issues in ecommerce competition and retail trends suggest caution.
Final Thoughts
The resurgence in Kohl’s stock highlights how social media can swiftly reshape market sentiment—even overshadowing weak fundamentals. That said, retail investors chasing quick gains should be wary of high volatility and potential rapid reversals. Long‑term investors will need to weigh real business value against speculative price swings.