Krispy Kreme shares surged by more than 11% after FBI Director Kash Patel mentioned his personal investment in the doughnut chain during a congressional hearing.
The rally fizzled within hours, with the stock closing up less than 1%, underscoring the speculative and meme-driven nature of recent trading activity.
The doughnut chain's shares surged by as much as 11.5% on Wednesday, only to end the day with a modest gain of 0.96%, erasing nearly all the earlier momentum.
The rally was triggered not by earnings or strategic announcements, but by Patel's personal investment disclosure and offhand remarks during testimony before the House Judiciary Committee.
A Sweet Surprise on Capitol Hill
The unusual market reaction began when Colorado Representative Joe Neguse questioned Patel about his recent stock purchases, including shares in Krispy Kreme and ON Semiconductor.
Patel, who assumed his role as FBI Director in February 2025, responded: 'Generally speaking, before I got this job, I was trading stocks, but not a lot like most people. I just follow certain industries, and I thought they would be a good investment.'
His comments, though informal, were enough to send Krispy Kreme's shares soaring. Traders appeared to interpret the endorsement as a signal, fuelling a brief frenzy that saw the stock jump 11.5% before retreating sharply by the close of trading.
Meme Stock Mania and Market Froth
The episode underscores the speculative nature of current market behaviour, where momentum and virality often outweigh fundamentals.
Steve Sosnick, chief strategist at Interactive Brokers, described the rally as 'emblematic of the approach that a lot of speculators have to the market and how they will jump on any piece of positive-sounding news and how that can create self-fulfilling rallies, at least in the short term.'
He added: 'The reaction just shows you the level of froth in the market... the rally basically faded almost as quickly as it started, because it was based really on not much.'
Krispy Kreme, founded in North Carolina in 1937, has seen its stock battered in 2025. Shares are down more than 68% year-to-date, despite occasional surges linked to the broader meme stock phenomenon.
On 22 July, the company recorded its second-best trading day ever, with a 26.7% single-day gain, before that rally too fizzled out.
Patel's Personal Stake and Ethics Clearance
According to financial disclosures filed with the Office of Government Ethics, Patel purchased between $15,000 and $50,000 worth of Krispy Kreme shares on 9 May 2025.
He also acquired between $50,000 and $100,000 in ON Semiconductor stock three days later. Both investments have since appreciated, with Krispy Kreme rising approximately 15% and ON Semiconductor up 12% since Patel's entry.
Patel stated during the hearing that he submits proposals under Department of Justice guidance before executing trades, and that his holdings have been cleared of any conflict with his official duties.
He had previously divested over 40 positions, including shares in NVIDIA and Palantir Technologies, to avoid potential ethical concerns.
Political Fallout and Regulatory Scrutiny
The timing of Patel's remarks coincides with renewed efforts in Congress to ban stock trading by federal officials and lawmakers. Patel indicated his willingness to collaborate with Rep. Neguse on such legislation, though critics argue that even cleared trades can create perceptions of impropriety.
The FBI declined to comment on Patel's investments, while the Department of Justice has yet to issue a formal statement.
A Hollow Rally for a Troubled Stock
Despite the brief excitement, Krispy Kreme's fundamentals remain under pressure. The company's market capitalisation stands at $600 million, with shares trading between $2.50 and $12.68 over the past year.
As Sosnick noted, 'There's a difference between investing and just sort of chasing stories, and this falls into the latter.'
For Krispy Kreme, the sugar rush may have been short-lived, but it's a telling snapshot of how sentiment and speculation continue to shape modern markets.
