Rivian, Wayfair, and 7 More Stocks That Could Join the Meme Trade

A good chunk of Rivian’s shares outstanding are held in bets against the stock. (David Paul Morris/Bloomberg)

Kohl’s stock has gone bonkers, and meme stocks look to be back in fashion. There’s a laundry list of candidates to join the party.

Shares of Kohl’s almost doubled at the market’s open Tuesday morning, though its gain moderated to “only” 35% by midday. There’s no sign of any company news that would move a stock to this degree: The retailer’s next earnings report isn’t until late August.

Most likely, the stock is experiencing a “short-squeeze.” Many traders have sold the stock short, a bet on a stock’s decline that means borrowing shares to immediately sell them. Investors eventually have to buy shares back—ideally at a lower price so they can pocket the difference. The buying pressure, however, can build rapidly if those short sellers fear that the stock will gain, which creates upward momentum, or a squeeze, for the price.

Kohl’s came into July with 53 million shares shorted, or about 47% of shares outstanding, according to FactSet. That’s extremely high, considering that short interest for the SPDR S&P 500 Trust exchange-traded fund sits at 11%. It doesn’t require being Albert Einstein to suggest that Kohl’s stock is seeing a short-squeeze.

That dynamic suggests retail traders could be doing some of the buying of Kohl’s stock, in what looks like another “meme trade.” Often, when the broader stock market rallies to several new highs, which it has done recently, retail traders—individual folks trading on free or cheap platforms such as Robinhood —come into the market and move smaller market value stocks with fairly low share prices. Retail traders often try to push heavily-shorted stocks higher, forcing short sellers to buy back shares, creating large gains.

The meme trade looks resurgent in general. For instance, shares of the $2.6 billion Opendoor Technologies, trading at just over $3, are up almost twofold in the past three days.

Now, a bunch of other names look like candidates to become meme stocks. We found stocks that are in the top 30 in terms of short interest as a percentage of total shares outstanding. Short interest for these stocks ranged from 18.9% of shares to 57.6%.

Of those 30, we identified the ones that are widely recognized by the public, either because they are known consumer brands or they have been in the news recently. Some have been in the news because their businesses have deteriorated— Hims & Hers Health is an example. Others are highly speculative bets, including quantum computing companies, such as Rigetti Computing and D-Wave Quantum .

Another is Moderna , which most people have heard of because it sold one of the Covid-19 vaccines—its fairly low share price could make it as an easy target for retail traders to push around.

The other consumer companies with share prices below $100 that have the highest short interest are Rocket Companies, with short interest at 30.3%, Wayfair at 22.9%, Etsy at 21.7%, Rivian at 21.6%, and Birkenstock at 19.8%.

Buckle up for potential big moves in many of these names.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com