Kohl’s Shares Soar 37% Amid Meme-Stock Frenzy Despite Weak Fundamentals

New York: Shares of department store chain Kohl’s Corp. surged in volatile trading on Tuesday, closing 37% higher after an early-session rally echoed the meme stock mania of previous years. The stock more than doubled in early trading before pulling back sharply, triggering a temporary trading halt due to volatility.

The rally took place without any official announcements from the company and came amid heightened chatter on Reddit’s Wall Street Bets forum. Traders there pointed to Kohl’s as a potential short-squeeze candidate due to its high short interest, estimated at nearly 50% of outstanding shares, according to data from FactSet.

The trading volume for Kohl’s was nearly 17 times higher than its 30-day average by late morning Tuesday, reflecting the spike in retail investor activity. Despite the initial surge being pared back, the day’s close marked a significant jump from Monday’s closing price of $10.42 per share.

“There’s a lot of irrational exuberance around the stock. It’s a very similar thing to what we saw with Bed Bath & Beyond back in the day,” said Neil Saunders, Managing Director at GlobalData. “There’s nothing really that Kohl’s has done to fundamentally earn this level of increase. The business fundamentals remain quite weak.”

Kohl’s has faced significant headwinds in recent years, including falling sales, stiff competition, and a leadership transition. The company is currently led by an interim CEO following the exit of Ashley Buchanan earlier this year amid a conflict-of-interest scandal.

The department store chain operates more than 1,100 locations across the U.S. and has been a recurring subject of takeover speculation, activist investor interest, and at times, bankruptcy rumors. In May, the company projected fiscal 2025 sales would decline by 5% to 7%, with comparable sales expected to fall between 4% and 6%.

Market analysts note that stocks with high short interest and broad consumer familiarity, such as Kohl’s, are often targets during periods of speculative retail trading. When large numbers of individual investors buy into a heavily shorted stock, it can trigger a short squeeze, forcing short-sellers to repurchase shares at higher prices to cover their positions, further driving up the price.

While Kohl’s experienced a sudden boost in market valuation, financial experts caution that the rally appears disconnected from the company’s underlying performance.