Jim Cramer's Surprising Reversal on Meme Stock Bets Sparks Market Debate

Financial television personality Jim Cramer sent shockwaves through Wall Street on Tuesday when he dramatically reversed his long-standing skepticism about speculative, retail-driven trading patterns. This time, the focal point was Kohl’s, a department store chain most institutional investors had written off years ago. Rather than celebrating the stock’s meteoric rise, Cramer issued an urgent warning directed at short sellers: it’s time to cover your positions before this mirrors another GameStop scenario.

His comments arrived as Kohl’s shares experienced explosive volatility. Trading halted temporarily due to extreme market swings before the stock finished the day up 37.62%. According to FactSet data, approximately 50% of Kohl’s outstanding shares were sold short—a recipe for potential short squeeze conditions when retail buying pressure mounts. This was precisely the dynamic that had ignited the infamous 2021 GameStop episode, when coordinated retail interest cost hedge funds roughly $20 billion in losses.

The Latest Flip-Flop: Why Jim Cramer Is Now Defending Short Squeeze Targets

Notably, Cramer’s defense of Kohl’s wasn’t rooted in any renewed confidence about the company’s business model. He didn’t credit partnerships with Amazon or Sephora for the stock’s sudden acceleration. Instead, he zeroed in on the mechanics of the situation: massive short interest combined with organized retail investor interest, particularly from Reddit’s WallStreetBets community. The pattern matched the 2021 playbook perfectly—small investors banding together to pressure hedge funds into covering underwater positions.

This observation underscores why Cramer believes short sellers have miscalculated badly. Kohl’s may face real operational challenges, but the bearish thesis doesn’t hold water. A legitimate short position requires conviction that a company is heading toward bankruptcy—a scenario that doesn’t fit Kohl’s profile.

A Sharp Contrast: How Jim Cramer Once Dismissed What He Now Defends

What makes this reversal so striking is Cramer’s extensive track record of attacking precisely this kind of market behavior. Throughout the 2021 meme stock phenomenon, he relentlessly criticized GameStop and AMC as “hype machines” devoid of earnings power, dismissing them as emotion-driven speculation lacking fundamental support. He labeled Trump Media & Technology Group vastly overvalued for disregarding basic metrics like revenue and profitability.

Most infamously, Cramer told viewers to sell GameStop when it traded around $400—advice that became widely ridiculed and spawned the “Inverse Cramer” meme. Reddit communities, particularly WallStreetBets, began deliberately executing the opposite of his recommendations, transforming him into a symbol of outdated conventional wisdom.

Hedge Fund Timing and Market Strategy: Jim Cramer’s New Argument Against Short Sellers

Today’s version of Jim Cramer presents a different calculation. He contends that the hedge funds holding short positions made a strategic error not in initiating the bets, but in executing the exit. There was a clear window for covering earlier in the year when President Trump’s tariff announcements triggered panic selling. That was the moment to unwind positions without absorbing catastrophic losses. Missing that inflection point was the real mistake.

According to Cramer, the current environment demands a more disciplined approach to bearish bets. A company with declining revenues and heavy debt loads remains shippable territory—but only if the thesis justifies it. Betting against a retailer with legitimate operational headwinds is defensible; betting against one where retail investors have mobilized and sentiment has shifted is a different calculation entirely. The short sellers in Kohl’s overestimated their information advantage and underestimated the power of coordinated retail interest to move markets in ways traditional fundamental analysis doesn’t capture.