Meet the DORK stocks — the latest obsessions of Reddit’s retail trader army
The acronym will probably be out of date by lunchtime, as feverish trading spreads and the lifespan of a meme stock appears to be shortening.
What do doughnut peddler Krispy Kreme, home buyer Opendoor Technologies, mortgage platform Rocket Companies, and department store Kohl’s have in common?
Not much, except each is a new target of a reinvigorated set of retail traders.
In the last 72 hours, the following stocks have seen their trading volumes, mentions on Reddit’s infamous r/WallStreetBets, and stock prices soar: DNUT, OPEN, RKT, KSS. Together, they make up what we could call the DORK stocks — the latest class of meme stocks.
In the last two days, an average of 1.76 million call options have changed hands in OPEN. That’s up 12x on the average of the previous 20 sessions. In RKT, call volumes are up 6x, and they’re up 10x in KSS. In DNUT, call volumes went from close to zero to over 100,000, rising a whopping 33x.
Same same, but different
Since the GameStop era of 2021 — when an army of traders took on hedge fund titans, choosing a heavily shorted, ailing video game retailer as their battleground — market participants have tried hard to predict the next meme stock.
Most candidates for retail love do share a few common characteristics: often the company has been struggling, heavily shorted by Wall Street, and sometimes comes with a hint of nostalgia about the company’s product or service.
But while those characteristics remain, what seems to be changing about the meme stock landscape is the speed at which these moments appear to coalesce.
Opendoor, which traded a bonkers 298% of its market cap on Monday (some $7 billion, more than Meta), is a good example. One bullish note from hedge fund manager Eric Jackson was enough to spark an options buying frenzy in the beleaguered tech company. As call volumes cracked 2 million on Monday, the resulting gamma squeeze sent the stock soaring. So, OPEN is the next GME and will suck up all of the oxygen on the hypothetical retail trading floor, right?
Well, no, apparently. Rather than intensifying on one name, retail trading attention has since spread to department store Kohl’s, which ripped 38% higher yesterday. Quietly gaining throughout the day was also Krispy Kreme, which rose 27% in Tuesday’s session and is up another 25% in early trading this morning. After the bell it was RKT’s turn, with shares currently up 14% in the premarket, seemingly catalyzed by a late-night Reddit post saying that it “tastes like 2021 again. $130k YOLO on $RKT,” with a screenshot of a position in RKT with 9,020 shares.
As my colleague Luke Kawa reported yesterday, the latest bout of feverish retail trading is raising eyebrows at Citadel Securities (emphasis mine):
“Echoing our colleagues in institutional derivatives this morning, the current level of retail bullishness is something to keep a close eye on,” Citadel Securities’ Thomas Sozzi wrote. “In cash equity space, retail clients on our platform have been net buyers for the past 18 trading sessions in a row! This bullish streak hasn’t been seen on our platform in over 3 years.”
With Big Tech earnings on deck today, how long will this latest class of meme stocks be able to hold the spotlight? The major test will be when Tesla, a favorite of retail traders, reports after the bell today.
(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. Citadel Securities has a business relationship with Robinhood.)
