What Happened?
Shares of department store chain Kohl’s (NYSE:KSS) jumped 35.5% in the morning session as the company exhibited the classic hallmarks of a meme stock. It became apparent that, despite a lack of corporate announcements or major stock ratings, its high short interest and nostalgic appeal to retail investors likely fueled a significant short squeeze. Kohl's had approximately 50% of its outstanding shares sold short, according to FactSet, making it a prime target for coordinated buying by retail investors looking to squeeze out short sellers.
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What Is The Market Telling Us
Kohl’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. But moves this big are rare even for Kohl's and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 3.1% as the major indices pulled back (Nasdaq -0.8%, S&P 500 -0.77%), largely due to escalating concerns surrounding the July 9th deadline for new US tariffs, amplified by specific announcements. Earlier in the day, President Trump confirmed that Japan and South Korea would face new 25% tariffs on their imports to the US, effective August 1st. These announcements came ahead of the broader July 9th expiration of a 90-day pause on reciprocal tariffs, which failed to produce comprehensive trade deals with most nations. This action against two major trading partners, coupled with the ongoing threat of further tariffs on countries associated with the BRICS bloc, injected significant uncertainty and apprehension into global markets. Investors were likely reacting to the increased costs for businesses, potential disruptions to global supply chains, and the broader implications for international trade relations.
Kohl's is up 1.4% since the beginning of the year, but at $14.26 per share, it is still trading 34.2% below its 52-week high of $21.66 from July 2024. Investors who bought $1,000 worth of Kohl’s shares 5 years ago would now be looking at an investment worth $662.86.
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