Why Kohl’s and WallStreetBets Are Tanking Short Sellers – Is Opendoor Next or Just Another Pump and Dump?

Kohl’s stock has become the latest battleground in the meme-stock frenzy, soaring as much as 90% in a Reddit-fueled short squeeze that’s left Wall Street scrambling. The rally echoes past surges in heavily shorted stocks like GameStop, with retail traders once again targeting struggling companies.

Meanwhile, Opendoor Technologies (OPEN) is drawing similar attention, with its stock surging 325% in a month—raising questions about whether this is a sustainable turnaround or another pump-and-dump. As Jim Cramer warns short sellers to “cover and move on,” the market braces for volatility.

The resurgence of meme-stock mania highlights the ongoing power of retail traders to disrupt traditional Wall Street strategies. With Kohl’s and Opendoor leading the charge, investors are left wondering: which stock will be next?

Why Kohl’s and WallStreetBets Are Tanking Short Sellers – Is Opendoor Next or Just Another Pump and Dump?

The Meme Stock Frenzy Returns: Kohl’s 37% Surge Leads New Wave

Kohl’s Corporation (KSS) saw its stock price skyrocket 37% this week as retail investors on platforms like WallStreetBets rediscovered their appetite for meme stocks. The department store chain, which had been struggling with declining sales and profitability, suddenly became the latest battleground between retail traders and institutional short sellers. With approximately 49% of Kohl’s float sold short, the conditions were ripe for a massive short squeeze.

This surge follows a familiar pattern from the 2021 meme stock mania, when companies like GameStop and AMC Entertainment experienced similar parabolic rises. However, unlike those earlier episodes that focused on bricks-and-mortar retailers, the current wave includes companies like Opendoor Technologies (OPEN), an iBuying platform, and QuantumScape, a battery technology firm.

Is Opendoor Becoming the New GameStop? Retail Traders Bet Big

Opendoor Technologies has emerged as perhaps the most surprising member of this new meme stock cohort. The company, which uses algorithms to buy and sell homes, recorded an incredible 180% weekly gain as traders piled into the stock. Like Kohl’s, Opendoor carries significant short interest, making it vulnerable to a coordinated buying campaign.

The company faces significant fundamental challenges, including never having reported a quarter of positive EBITDA and recently settling a $39 million class-action lawsuit related to its pricing algorithms. These realities haven’t deterred retail traders who seem focused primarily on the short squeeze potential rather than traditional valuation metrics.

How Much Higher Can Kohl’s Stock Really Go? Analysts Sound Warning

Wall Street analysts remain skeptical about the sustainability of Kohl’s rally. Goldman Sachs recently raised its price target from $5 to $7, still significantly below the current $9.58 trading price. This disconnect highlights the growing divide between market fundamentals and meme stock mania.

Ms. Tomato, I’ve seen this movie before in 2021. Eventually gravity always wins – these rallies might last days or weeks, but they inevitably collapse.

But Mr. Lettuce, isn’t this time different because interest rates are falling and the economy is improving? Maybe these stocks deserve higher valuations now?

Fundamentally, Kohl’s is still facing shrinking sales and Opendoor has never been profitable. Meme rallies distract from these realities but don’t change them.

Reddit’s WallStreetBets Community Fuels the Fire Again

The WallStreetBets subreddit has once again become ground zero for coordinating these trades, with members sharing detailed analyses of short interest and float statistics. Discussions about both Kohl’s and Opendoor dominate the forum, with some users posting screenshots of massive gains while others warn about the risks.

Unlike 2021, today’s conversations show more sophistication about options strategies and gamma squeezes. However, the core dynamic remains the same: a large group of retail traders targeting heavily shorted stocks to force institutional investors to cover their positions at increasingly higher prices.

Jim Cramer’s Take: Should Short Sellers Cut Their Losses?

CNBC’s Jim Cramer entered the fray with controversial advice for short sellers: “cover and move on.” His comments added fuel to the fire, suggesting that the pain trade remains higher for those betting against Kohl’s.

Cramer’s perspective reflects the challenging position short sellers find themselves in during these episodes. With social media able to mobilize vast buying power quickly, traditional fundamental analysis becomes secondary to crowd psychology and technical factors.

The Big Question: Sustainable Trend or Short-Lived Mania?

History suggests these meme stock surges tend to be explosive but short-lived. The 2021 episodes saw GameStop fall from $483 to $40 and AMC from $72 to $6 within months of their peaks. However, each new generation of retail traders seems determined to prove that “this time is different.”

Key warning signs investors should watch:

• Unusually high trading volume (Kohl’s saw its entire float traded in one morning)
• Extreme volatility with daily swings of 20% or more
• Growing disconnect between price and fundamental metrics
• Increased options activity fueling gamma squeezes

Conclusion: Navigating the Meme Stock Minefield

The current meme stock phenomenon presents both opportunities and dangers. While early participants in the Kohl’s and Opendoor rallies have enjoyed massive gains, latecomers risk significant losses when the music stops. The smartest approach might be to observe rather than participate in these highly speculative moves, or to allocate only small amounts of discretionary capital.

As the market digests whether this is a sustainable trend or short-lived mania, one thing remains certain: WallStreetBets and retail traders have once again proven their ability to move markets and challenge Wall Street’s traditional power structures.