The dramatic rally in Kohl’s stock was not triggered by any turnaround in the retailer’s financials or corporate news. Instead, the momentum was fueled by a wave of social-media excitement, particularly on Reddit’s WallStreetBets and similar forums. “It’s all social media chatter,” Steve Sosnick of Interactive Brokers told Bloomberg. “Remember that a highlight of the meme stock era was a dose of nostalgia for companies like GameStop and AMC. Social media chatter can become self-fulfilling.”

Users spotlighted the company’s extraordinarily high short interest—roughly 49% of its float, or 53 million shares—making it a prime target for a so-called short squeeze. This buying frenzy forced traders betting against the stock to cover their short positions, amplifying the upward pressure on share prices. Trading in Kohl’s shares were briefly halted by the New York Stock Exchange, evoking memories of pandemic-era meme-stock rallies, although trading halts are typical for various kinds of volatile activity. Even after the initial surge abated, Kohl’s shares held on to double-digit gains, finishing the day far above Monday’s close and drawing attention from both regulators and analysts.

Fundamentals vs. fad: the disconnect

Despite the dramatic price action, Kohl’s has struggled operationally. Once a staple of American malls, Kohl’s has faced a string of challenges, including consecutive quarters of falling same-store sales and shrinking net revenue. The Fortune 500 retailer recently ousted CEO Ashley Buchanan over conflicts of interest, marking the retailer’s third CEO in as many years.

Major banks have slashed price targets on the shares, with some analysts predicting fair value for the stock as low as $4–$8, citing persistent weaknesses in store traffic, competition, and strategy. Also, the company recently trimmed its dividend amid attempts to shore up cash.

Several ingredients made Kohl’s enticing for meme-stock traders, though. Beyond the high amount of short activity, the stock was perceived as a bargain by contrarian meme traders, having languished in single digits for months. The flurry of comments about Kohl’s stock on Reddit includes many since-deleted comments.

Analyst and Industry Reaction

Wall Street skepticism has grown amid the frenzy. Most analysts maintain a cautious tone, noting there is little in the way of fundamental news to justify the move. Goldman Sachs and UBS both maintain price targets below $10, emphasizing concerns over the sustainability of the hype-driven rally.

Jay Woods, a strategist at Freedom Capital Markets, offered a blunt assessment to Axios: “Meme stocks are back … There’s no apparent reason for the stock price to have surged this much.”

Kohl’s dramatic surge is part of a broader rebound in meme-stock enthusiasm. Opendoor Technologies, another struggling firm, experienced a similar spike earlier in the week, suggesting the appetite for speculative group action remains alive among retail investors. The market’s robust rally in 2025, combined with lingering high short interest in a handful of beaten-down names, has created fertile ground for rapid—and risky—run-ups.

Kohl’s entry into meme-stock territory highlights the enduring influence of online communities in shaping financial markets. While some retail traders may score quick profits, history suggests such episodes of exuberance can quickly unwind, leaving latecomers nursing losses.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.