July 22 (Reuters) – Shares of Kohl’s Corp (KSS.N)
, opens new tab briefly doubled in value on Tuesday, as retail traders piled into the U.S. department store chain’s stocks and options, making it one of the most actively traded stocks on retail trading platforms.
Kohl’s shares opened up about 100% at a 10-month high of $21.23 on Tuesday, triggering a trading halt, before paring gains to trade up 39% at $14.48, late in the afternoon.
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With little news to spur a move of that magnitude, analysts said the trading was reminiscent of the price and trading volume surges seen during the ‘meme-stock’ rally from 2021 in highly shorted retail favorites such as GameStop (GME.N)
, opens new tab and AMC Entertainment (AMC.N)
On Tuesday, Kohl’s topped the list of trending tickers on retail investor forum Stocktwits.
“Kohl’s has a lot of (fundamental) issues and yet this kind of crazy group move up just exemplifies what’s happening with the retail investor where they’re going to hop on superfast momentum stocks that we love to call meme stocks and hope to be able to make money,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
Retail investors have remerged as a potent force in markets in recent months as U.S. stocks overcame their tariff-induced April swoon to reclaim record highs, even as institutional investors have taken a more cautious approach to piling back into stocks.
On Tuesday, about 183 million shares traded hands by 2:20 p.m. ET, about 25 times the stock’s 25-day moving average volume, according to LSEG data.
In the options market, Kohl’s made the list of the 10 most actively traded names by volume, rubbing shoulders with much larger companies, including other retail favorites Nvidia and Tesla.
Overall Kohl’s options volume stood at 360,000 contracts, or about 12 times its average daily trading volume, according to options analytics firm Trade Alert.
Call options betting on the shares rising above $17.50 by Friday were the most actively traded Kohl’s options with trading volume topping 32,000.
“That’s new trades and based on little news that I see, pure speculation,” said Ophir Gottlieb, chief executive of Los Angeles-based Capital Market Laboratories.
Through Friday, Kohl’s shares have shed about a third of their value this year as the company, which fired its CEO in May for a personal relationship with a vendor, has come under attack from short sellers.
About 49% of Kohl’s outstanding shares available for trading are shorted, LSEG data showed, leading to some analysts viewing Tuesday’s price move as partially driven by a short-squeeze.
A short squeeze occurs when investors who had sold borrowed shares in the hopes of making money from a share price decline are forced to buy shares to close their losing positions.
“This is reminiscent of a coordinated move by many investors to chase a high short float stock,” Gottlieb said.
Meme stock rally burst into the open in 2021 when the COVID-19 lockdowns boosted savings, policy stimulus put cash into people’s pockets and extremely low interest rates pushed investors to the stock market.
Earlier this week, other highly shorted stocks such as Opendoor Technologies (OPEN.O)
, opens new tab also witnessed strong retail interest. The online residential real estate platform’s shares were up 10%, having gained more than 300% over the past six sessions.
Reporting by Saqib iqbal Ahmed and Johann M Cherian; Additional reporting by Shashwat Chauhan, Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty, Arun Koyyur and Daniel Wallis
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