shares of Kohl's Corporation (NYSE: KSS) doubled in early trading, sparking excitement among investors and social media users. The department store chain, known for its Sephora partnership and family-friendly shopping, saw its shares surge as much as 117%, hitting an intraday high of $21.23 and stabilizing around $13-$14 by midday, marking a 30-63% gain for the day. What's behind this wild surge? Let's understand this frenzy, from the Reddit-generated hype to the workings of the short squeeze.
Kohl’s stock soars in Reddit-fueled meme stock rally.What Sparked the Kohl’s Stock Surge
The rally began with a wave of retail investor excitement, fueled primarily by posts on Reddit's WallStreetBets community and X. Investors focused on Kohl's high short interest—49% of its 112 million share float, or about 53 million shares, were sold short. This made Kohl's a prime target for short squeezes, where traders buy heavily to force short sellers to cover, causing prices to rise. Trading volume reached more than 100 million shares, nearly 20 times the 30-day average, causing volatility to spike at times. As one X user pointed out, Kohl's broke the daily volume record in a matter of minutes, leading some to call it a "meme stock de jure."
Is This Another GameStop Moment
This surge at Kohl's is similar to the GameStop and AMC surges of 2021, where retail investors coordinated on social media to squeeze heavily shorted stocks. Posts on X and Reddit highlighted Kohl's 46-50% short float and name recognition, making it a "perfect storm" for a meme stock rally. However, some users cautioned that the momentum could fade, and advised short stop-losses due to Kohl's weak fundamentals. Unlike GameStop, Kohl's lacks a transformational catalyst, but heavy interest from retail investors has kept this stock in the spotlight.
Behind the Numbers: Kohl’s Business Challenges
Despite the stock market turmoil, Kohl's faces real challenges. The retailer expects revenue to decline 5-7% in fiscal 2025 and comparable sales to decline 4-6%. In the fourth quarter of 2024, net sales fell to $5.18 billion from $5.71 billion last year, and full-year 2024 sales are projected to be $15.39 billion, down from $16.59 billion in 2023. A leadership change hasn't helped either—former CEO Ashley Buchanan was ousted in November 2024 over conflict of interest concerns, leaving an interim CEO to take over. Kohl's also plans to close 27 underperforming stores and cut its corporate workforce by about 10% by April 2025.
Are There Bright Spots for Kohl’s
Kohl's is not without hope. Its partnership with Sephora, which generates $1.3 billion in revenue in 2023 and is projected to reach $2 billion by 2025, has been a notable achievement. The company also launched 200 Babies "R" Us in-store shops in 2024, aiming to generate an additional $2 billion in revenue. Kohl's real estate portfolio, valued at $9 billion against a market capitalization of $1.5 billion, has sparked discussions on Reddit about low valuation. The company's quarterly dividend of $0.125, confirmed in May 2025, adds to the allure, although declining earnings (forecast for 2025 is $0.10-0.60 per share) raise concerns.
What’s Next for Kohl’s and Meme Stocks
The rally is in line with broader meme stock activity, which saw stocks like Children's Place (NASDAQ: PLCE) gain 19% on the back of similar short-squeeze dynamics. Analysts remain cautious, with UBS setting a target price of $4 and Goldman Sachs adjusting to $7, well below Kohl's July 21 closing price of $9.58. Some X users are speculating about the possibility of an acquisition, citing the new CEO's private equity ties, but others are warning of a decline following a squeeze. For now, Kohl's is riding a wave of excitement in the retail sector, but its long-term outlook depends on addressing fundamental challenges.
Should You Jump on the Kohl’s Bandwagon
Kohl's surge is a unique blend of social media hype and market moves, but it's not for the faint of heart. The stock's volatility—up 30-63% in a single day—highlights the risks of meme-based trading. While real estate values and strategic partnerships spark some optimism, Kohl's declining sales and operational difficulties suggest caution. Investors can keep an eye on further social media action or corporate updates, but as one X post said, "It can rise or sink fast—be smart."
Disclaimer: This article is for informational purposes only and is not financial advice. Stock markets are volatile and investing involves risk.
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