By Johann M Cherian

July 23 (Reuters) -

Retail investors are once again banding together to bet on

highly shorted loss-making companies such as Kohl's and Krispy

Kreme this week, bringing to mind the "meme stock" frenzy that

gripped Wall Street four years ago.

The spotlight this time around is on online real estate

platform Opendoor Technologies ( OPEN ), struggling department

store operator Kohl's, donut chain Krispy Kreme

and action camera maker GoPro ( GPRO ).

Here is what you need to know about the latest rally.

WHAT TRIGGERED IT THIS TIME?

Some market participants have attributed the rally to

bullish posts from EMJ Capital portfolio manager Eric Jackson on

X.com last week. Jackson said his hedge fund has built a long

position in Opendoor ( OPEN ), projecting the stock to hit $82 in the

longer term.

Traders were quick to target the stock, pushing it 300%

higher so far this month.

Its shares hit a record low of 50 cents just last month,

having shed more than 90% in value since its peak in 2021. The

company has racked up losses in the past 11 quarters.

Retail investors have been emboldened by a sharp recovery in

U.S. stocks to all-time highs as investors looked past President

Donald Trump's chaotic trade policies to bet on a healthy

economy and interest rate cuts from the Federal Reserve.

Easing U.S. trade tensions, with top trade partners such as

Japan, have also helped risk appetite.

STOCKS CAUGHT IN THE LATEST FRENZY

Krispy Kreme, GoPro ( GPRO ), Kohl's and Opendoor ( OPEN ) are among a few

stocks that are caught in the amateur trading frenzy, fueled by

social media posts on X.com, Reddit ( RDDT ) and Stocktwits.com.

These stocks have significant bearish positions, leaving

short sellers singed as they roared ahead, causing what is

called a short squeeze.

Short interest is at 14% in Krispy Kreme and 8% in GoPro ( GPRO ),

according to data compiled by LSEG, while bearish positions on

Kohl's and Opendoor ( OPEN ) were at 47.3% and 18.6%, respectively.

At the same time last year, Keith Gill's posts on social

media were a major trigger for the frenzy into stocks such as

GameStop ( GME ) and AMC Entertainment ( AMC ).

WHAT IS A MEME STOCK?

A meme stock is a moniker for a company whose shares get a

boost when retail traders rally around it on platforms such as

Reddit ( RDDT ), stocktwits.com and X.com to trigger a short squeeze.

These companies have high short-interest because of their

weak fundamentals and loss-making nature, but meme stock traders

love them for their cheap stock price.

The frenzy first burst into the open during 2021 when

COVID-19 lockdowns boosted savings, policy stimulus put cash

into people's pockets and extremely low interest rates pushed

investors to the stock market.

A proliferation of zero-fee trading apps also encouraged

anyone with a smartphone to dabble in stocks.

Thousands of Reddit ( RDDT ) users on low-cost trading

platforms such as Robinhood banded together to drive up

the prices of these stocks, squeezing hedge funds that had taken

short positions, or bets against those shares.