Kohls Stock Soars 50% in Meme-Style Rally But Is It Sustainable?

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•  03 Aug 2025
 

•   KSS  
   
  +2.98%

Kohl’s stock $KSS has recently surged over 50% in a stunning rally, catching Wall Street by surprise. The dramatic rise was driven by a classic short squeeze, with nearly 40% of the company’s shares sold short making it one of the most heavily shorted stocks in the market. Retail traders, especially from Reddit and other online communities, saw the high short interest as an opportunity and piled in, sparking comparisons to past meme stock frenzies like GameStop and AMC.

But this explosive move isn’t backed by improving fundamentals. Beneath the hype lies a struggling retail brand dealing with falling sales, leadership turmoil, and strategic missteps. In its most recent fiscal quarter, Kohl’s reported a 48% drop in profit and a 7% decline in revenue, falling to $15.4 billion. Perhaps even more concerning, the company has posted 13 straight quarters of declining same-store sales, a signal of continued erosion in customer loyalty and foot traffic.

Leadership instability continues to plague the company. Kohl’s has cycled through five CEOs in the last decade, each introducing and then reversing major strategic initiatives. Tom Kingsbury’s move to eliminate key private-label brands and reduce promotional offerings like Kohl’s Cash backfired. His replacement, Tom Buchanan, tried to backtrack but departed abruptly following an internal ethics investigation. Now under interim CEO Michael Bender, formerly of Walmart, the company faces lingering questions about direction and execution.

Still, some analysts see potential value amid the chaos. Morningstar’s David Schwartz places a fair value of $40 on Kohl’s stock nearly four times its recent trading level. He cites the company’s extensive real estate holdings as an overlooked asset. Kohl’s owns more than 400 store and distribution properties outright, a portfolio that could be worth more than the entire market cap. This has attracted the interest of value investors and led to speculation about a possible buyout. Back in 2022, Franchise Group offered $60 per share (later revised to $53), but the deal fell through.

So why did the stock spike so sharply in 2025? It comes down to timing, sentiment, and short interest. Once shares began to rise, short sellers rushed to cover their positions, adding fuel to the fire. The result: a textbook short squeeze that turned Kohl’s into a viral sensation. However, the rally was short-lived—shares have since fallen more than 20% from their July highs, underscoring the volatile nature of meme-driven moves.

Kohl’s now stands as a prime example of the modern stock market’s evolving dynamics. Individual investors, armed with data and driven by online communities, can move markets, especially when short interest is high and narratives go viral. But while momentum can lift a stock in the short term, fundamentals eventually matter.

For long-term investors, the question is whether Kohl’s represents a deep value opportunity or a dangerous trap. With real estate assets providing a potential valuation floor, the upside case depends on whether new leadership can finally execute a coherent turnaround strategy. Until then, the stock remains a high-risk, high-reward play in a retail sector that’s still trying to find its footing.