What Happened?
Shares of doughnut chain Krispy Kreme (NASDAQ: DNUT) jumped 13.8% in the morning session after a surge in interest from retail investors, often labeled 'meme stock' activity, was fueled by positive analyst commentary and high short interest.
This move was largely driven by retail traders who targeted the stock, a common feature for shares with significant short interest. Data showed that short interest in Krispy Kreme's available shares stood at 15.1%. Adding to the momentum, Morgan Stanley analysts singled out the donut chain as the top-performing stock in the restaurant category during the third quarter. News of the company's international expansion efforts, including opening its first store in Madrid, also contributed to the positive sentiment. This combination of factors created a powerful rally for the stock.
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What Is The Market Telling Us
Krispy Kreme’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. But moves this big are rare even for Krispy Kreme and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was about 23 hours ago when the stock gained 2.6% as the stock's positive momentum continued as Morgan Stanley highlighted the company as a top performer in the restaurant sector, and news emerged of a major sponsorship deal with NASCAR. In a note, the investment bank stated that Krispy Kreme outperformed most of its US restaurant peers during the third quarter, even as the overall industry softened. This commentary suggested the company was successfully navigating a challenging market. Adding to the positive sentiment, reports indicated that Krispy Kreme, along with Procter and Gamble's Tide, would step in as headline sponsors for the 2025 NASCAR season. Such a high-profile partnership was expected to boost brand visibility.
Krispy Kreme is down 57% since the beginning of the year, and at $4.19 per share, it is trading 66.3% below its 52-week high of $12.42 from November 2024. Investors who bought $1,000 worth of Krispy Kreme’s shares at the IPO in June 2021 would now be looking at an investment worth $199.29.
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