Krispy Kreme Takes a Meme Stock Ride. Don’t Bite.

Krispy Kreme is betting on international expansion to help its sales. (Scott Olson/Getty Images)

Key Points

• Krispy Kreme shares surged over 30% on Wednesday and more than 50% since Monday, marking its best three-day stretch since 2021.
• Morgan Stanley’s report, cited online, noted Krispy Kreme’s third-quarter outperformance but rates the stock “underweight” with a $2.50 target price.
• Despite recent international expansion announcements, analysts maintain a cautious outlook, with an average target price of $3.84 per share.

Krispy Kreme is the latest meme stock to see its share price suddenly surge. Investors should expect another empty sugar high.

For the Charlotte-based maker of glazed doughnuts, 2025 has turned out a very difficult year. Shares have slid more than 51%, thanks to slumping revenue and a much-anticipated deal with McDonald’s that failed to pan out. While the company withdrew its outlook following the McDonald’s debacle this spring, analysts expect sales to tumble about 8% this year, according to FactSet.

Over the past few days, however, the stock has looked unstoppable. On Wednesday, shares surged more than 30% to $4.86. Since Monday, they are up more than 50%, putting them on pace for their best three-day stretch since 2021.

The rally made waves online, with Reddit users comparing the stock to Beyond Meat, another so-called meme stock that has rallied even more dramatically, doubling in price over the past few days.

It isn’t the first time Krispy Kreme has been batted around by the meme stock crowd. The shares rose nearly 40% in a single day in late July, before selling off almost as fast.

It’s difficult to tell exactly what set a fire under Krispy Kreme this time around, but one explanation is that it’s simply a misunderstanding.

Some recent online commentary points to a positive report on the stock from Morgan Stanley. However, this appears to be a misinterpretation.

Morgan Stanley did publish a report on the food industry Tuesday. The report mentions that Krispy Kreme stock outperformed during the third quarter, which is true. But it’s merely a statement of historical fact. The same report states Morgan Stanley rates Krispy Kreme “underweight” with a target price of $2.50 a share, far below its current trading price.

Morgan Stanley says Krispy Kreme is “an iconic company with lower brand ‘risk’ but lacks the history of operational performance [and] strategy execution.”

Krispy Kreme didn’t immediately respond to a request for comment.

Another possible explanation for the rally is Krispy Kreme’s international expansion, a key part of its strategy to offset flagging U.S. sales. The company recently said it opened a new shop in Madrid, and planned similar openings in Brazil and Uzbekistan by the end of year. However, this announcement was made Oct. 15, several days before the stock began to surge earlier this week.

The international expansion plans also failed to sway traditional sell-side analysts who track the stock. Among eight analysts that follow the stock, just one has a Buy rating, according to FactSet. The average target price is $3.84 a share, below the stock’s price Wednesday.

Write to Ian Salisbury at ian.salisbury@barrons.com