Forget earnings. Reddit traders may have just stumbled onto a different kind of meme-stock thesis, one rooted in real estate arbitrage rather than blind speculation.
Shares of Kohl’s (KSS) more than doubled in early Tuesday trading before closing up 37.6% on the da, following a viral post from a Reddit user on r/KSSBULL.
The user claimed the U.S. retailer was massively undervalued not because of its retail business but because of the property it sits on.
The post came from Caleb Harbert, who laid out a case that Kohl’s is effectively a commercial real estate company masquerading as a department store.
According to Harbert, Kohl’s owns between $5 billion to $10 billion in property assets, making it one of the largest non-REIT commercial real estate holders in the country. And it’s sitting on just $360 million in debt, with nothing major maturing until 2030.
It’s a line of thinking that echoes the old "Sum-of-the-Parts" argument once used to defend Sears, except this time, it’s getting traction on social media.
Under the hood
The stock spiked so much on Tuesday that the NYSE had to halt trading due to volatility limits. Reuters reports that more than 87 million shares changed hands by 10 a.m. ET, over 11x the 25-day average.
To be clear, Kohl’s isn’t suddenly a healthy business. It’s posted 13 straight quarters of declining sales. But that may no longer matter.
Harbert’s post suggests the game isn’t about earnings anymore. It’s about what else the company owns that Wall Street isn’t pricing in.
That shift could have implications beyond Kohl’s. If retail stocks with real estate footprints become the next meme frontier, expect short sellers to tread carefully.
“I don’t know if Kohl’s is a good or bad business,” wrote Brandon Beylo, a partner at Market Ops, “but that might not matter. It’s looking like 2021 again.”
“Meme-stock energy is BACK, but fundamentals are shaky... This one’s all gas, no brakes — until it isn’t,”Schaeffer’s Investment Research warned in an X post.
Above all, the idea that TikTok traders and Reddit posters are coming up with stock theses that are moving the market may be the most surprising turn of all.
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