Meet the new meme stocks: Krispy Kreme, GoPro, and Kohl’s shares soar as Reddit traders drive hype cycle

The share prices of Krispy Kreme, GoPro, and Kohl's have surged 25% or more in a single trading session, despite no major announcements from the companies. This sudden surge is attributed to the return of "meme stock mania". A meme stock is a stock promoted by online communities, often on social media platforms like Reddit, with the goal of building hype and driving up the stock price. The phenomenon emerged during the pandemic, with online investors seeking advice on which stocks to buy. Meme stocks often involve struggling companies with brand name awareness, and proponents buy shares at a low price, promote the stock, and sell before the hype collapses. Krispy Kreme, GoPro, and Kohl's are the latest meme stocks, with their share prices surging significantly in recent days. However, financial advisers warn against buying into meme stocks, as they are high-risk investments driven by online hype rather than company fundamentals. The prices of meme stocks can crash rapidly, as seen in the case of AMC Entertainment Holdings, which surged to over $566 in 2021 but is now worth $3.50 per share. Investors should exercise caution and not get caught up in the hype, as meme stocks can result in significant losses. The sudden surges in these stocks are a reminder that online communities can significantly influence the market, but investors should prioritize company fundamentals over online hype.