Fannie Mae, Freddie Mac shares tumble after conservatorship comments
After rising to a yearly peak of $35.81 at the end of May, GameStop’s volatility has been relatively low, likely due to the establishment of the Bitcoin treasury. Yet, memestock trading is not out of fashion.
Two companies took the mantle for speculative investing, Krispy Kreme (NASDAQ:DNUT) and GoPro Inc (NASDAQ:GPRO). Both are penny stocks under $5 per share, which makes them attractive for exposure in hopes of a quick buck, similar to memecoins. After all, it is easier to wade in shallower market cap waters.
But what makes DNUT and GPRO special as memestocks?
Krispy Kreme – 28.09% Short Interest
Like many altcoins and stocks, Krispy Kreme saw its highest valuation during the heyday of central bank money printing and stimulus packages, in July 2021 at $20.05 per share. DNUT shares are now priced at $4.38, still below the 52-week average of $7.80 per share. Over the week, DNUT stock is up 39.5%.
Similar to GameStop (NYSE:GME), Krispy Kreme operates a brick & mortar retail business model, but one that emphasizes franchising, manufacturing and wholesale distribution. In fact, most of the company’s retail locations are franchised stores. As its name suggests, Krispy Kreme’s main product is doughnuts.
This itself is problematic as doughnuts are one of the easiest foods to make in many different variations. Such a high commoditization risk was evidenced with the end of the company’s partnership with McDonald’s in late June. At the time, Krispy Kreme CEO Josh Charlesworth noted that “efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us.”
Such a statement points to structural vulnerability, driven by fragmented demand, high-cost operations and commoditization that undercuts pricing power. Specifically, the company’s need to deliver daily freshness creates a logistics overhead and diminishing returns.
Case in point, in the last earnings release for Q1 2025, Krispy Kreme reported 15.3% loss of revenue, incurring a 401.4% year-over-year net loss of $33.4 million. Likewise, the company’s operating income dropped by 270% to a loss of $20.3 million. This puts Krispy Kreme in a fragile position of having only $18.7 million in cash vs $54.6 million in current liabilities.
However, the company’s total debt-to-equity ratio of 0.83 is still relatively low to moderate, inviting memestock trading. Looking ahead, the company plans to outsource logistics to reduce overhead in addition to selling company-operated stores. Likewise, Krispy Kreme customers can expect novel doughnut variations in high-traffic retail locations nationwide.
Krispy Kreme’s “Hungry for Heroes” doughnuts collection in early July also suggests similar rollouts whenever new buzz around DC super heroes is generated.
GoPro – 9.69% Short Interest
Although it has a relatively low float percentage shorted, GPRO stock saw heavy action this week, rising up 91% to the current price of $1.52 per share. The all-time high for GPRO stock was all the way back in October 2014 at $93.85. This level seems no longer obtainable as the 52-week average price of GPRO stock is $1 per share.
The question is, why would a company, whose name is synonymous with robust action cameras, lose so much value? Of the many reasons to pick, one of the key drivers for this fall is low turnover as consumers upgrade cameras less often.
This is exacerbated by smartphone competition and the company’s lack of diversification. Moreover, GoPro CEO Nicholas Woodman announced in early May the transition of supply chains out of China into Vietnam and Thailand, while also having to increase product prices to offset costs.
For Q1 2025 earnings, the company reported a 13.6% year-over-year drop in sales to $134 million, incurring a net loss (GAAP) of $46.7 million. This is actually an improvement over the $339 million net loss in the year-ago quarter. GoPro ended the quarter with $69.6 million on cash balance against $316.9 million total current liabilities.
Despite tariffs, it is likely that Chinese action camera competitors will continue to eat away at GoPro’s profits, Insta360 specifically. Case in point, in early July, the International Trade Commission found that Insta360 infringed on GoPro’s intellectual property regarding its HERO camera design.
Nonetheless, Insta360 cameras, such as ONE X2 360, are still readily available for sales in addition to being highly rated by customers. In the long run, it may be the case that GoPro finds a buyer, which itself invites speculative exposure to GPRO stock. In early 2018, Woodman hired JP Morgan for such a scenario.
Suffice to say, priced so cheaply, GPRO stock is highly volatile and behaves like a typical memecoin where exposure timing is critical.
***
Looking to start your trading day ahead of the curve?Get up to speed before the bell with Bull Whisper—a sharp, daily premarket newsletter packed with key news, market-moving updates, and actionable insights for traders.Start your day with an edge. Subscribe to Bull Whisper using this link.