Shares of Krispy Kreme Inc. (NASDAQ: DNUT) extended gains on Wednesday, rising 28.17% to $4.76, adding to a 14% surge in the previous session as retail investors piled into the stock.
The buying frenzy was fueled by renewed social media momentum, positive commentary from Morgan Stanley, and reports of a new NASCAR sponsorship deal that could enhance the brand’s visibility.
Retail traders and meme stock revival
Krispy Kreme has reemerged as a favorite among retail traders on platforms like Stocktwits, where sentiment turned “extremely bullish” this week, scoring 95 out of 100 after being “bearish” just a day earlier.
The stock ranked among the most-watched tickers alongside Beyond Meat (NASDAQ: BYND), another heavily shorted stock that has gained over 600% in the last 3 days.
According to LSEG data, short interest in Krispy Kreme’s publicly available shares stood at 15.1%, making it a target for speculative trading.
More than 54 million DNUT shares traded hands on Wednesday, far above the three-month average of 4.7 million, as social media-driven traders reignited a familiar meme-stock rally.
While retail enthusiasm has boosted prices, analysts caution that Krispy Kreme’s fundamentals remain under pressure.
The stock is still down 51% year-to-date, reflecting ongoing business challenges despite the temporary boost in sentiment.
Morgan Stanley highlights Krispy Kreme’s Q3 outperformance
Adding to the buying momentum, Morgan Stanley noted that Krispy Kreme outperformed most US restaurant peers in the third quarter, earning recognition as a top performer in the sector despite broad industry softness.
The firm highlighted the company’s resilience in a challenging environment and pointed to its strong stock performance during the quarter, which rose 33%.
However, Morgan Stanley maintained its “Underweight” rating on DNUT with a $2.50 price target, implying a 33% downside from recent levels.
The bank said the overall restaurant sector was showing signs of a slowdown beginning in September, with quick-service and fast-casual restaurants expected to post weaker results than casual dining chains.
The investment bank’s mixed stance—acknowledging recent outperformance while maintaining a cautious outlook—reflected ongoing concerns about Krispy Kreme’s US business, where profitability has been under strain.
Sponsorship, expansion, and turnaround efforts
Investor sentiment also improved following reports that Krispy Kreme and Procter & Gamble’s Tide will serve as headline sponsors for the 2025 NASCAR season, a move expected to enhance brand visibility.
The company also rolled out seasonal promotions, including a limited-time Frankendough Dozen Halloween offer priced at $13.
Still, Wall Street remains cautious. The average analyst rating on DNUT is “Moderate Sell,” with an average price target of $3.23, implying a potential 31% downside.
While Wednesday’s rally showcased the power of retail enthusiasm, analysts warn that Krispy Kreme’s turnaround story is far from complete—and future performance will depend on whether its recovery strategy can deliver sustainable growth beyond the current meme-fueled surge.
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