Kohl's (KSS) stock plunged 5.30% in pre-market trading on Wednesday, giving back some of its gains following a meme stock-fueled rally in the previous session. This sharp reversal comes after the retailer's shares skyrocketed 37.62% on Tuesday, marking the largest daily percentage increase on record for the company.
The dramatic swing in Kohl's stock price reflects the volatile nature of meme stocks, which are often driven by retail investor sentiment rather than fundamental factors. Tuesday's surge was attributed to the high level of short interest in Kohl's shares, with nearly 50% of its outstanding shares available for trading being shorted. This caught the attention of retail traders on social media platforms, triggering a short squeeze.
However, the enthusiasm appears to have waned quickly, leading to today's significant drop. Market analysts suggest that this pullback is a natural correction following such an explosive and arguably unsustainable rise. The rapid reversal serves as a stark reminder of the risks associated with investing in highly volatile meme stocks, where prices can change dramatically in short periods.
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