What happened

After consumer stocks like GameStop went through the roof last week, volatility in a number of stocks that are popular on the Reddit board WallStreetBets continued into its second week today. 

However, the short squeeze in high-flying stocks like Express (EXPR)Koss (KOSS -0.43%), and Stitch Fix (SFIX -2.28%) seemed to be fading.

As of 1:59 p.m. EST, Express was off 15.3%, Koss was down 40.9%, and Stitch Fix had given up 10%.

A man looking at a stock chart going up and then down.

Image source: Getty Images.

So what

As the chart below shows, all three stocks have surged this year, though to varying degrees.

EXPR Chart

EXPR data by YCharts

Express, Koss, and Stitch Fix have also all benefited from short squeezes in recent weeks. Express and Koss have been particular favorites of the WallStreetBets crowd, while the Stitch Fix squeeze has come in waves following a strong December earnings report

Express rocketed from a closing price of $1.17 on Jan. 21 all the way to up to a high of $13.97 last Wednesday, as traders executed a short squeeze and as the stock surged alongside GameStop, AMC Entertainment Holdings, and other stocks popular on WallStreetBets. As of Jan. 15, 14% of the float was sold short, a modest amount, but that along with the Reddit-fueled frenzy was enough to drive the stock higher last week. However, today that trade is continuing to weaken, reflecting the reality that the mall-based apparel retailer is still a weak business, especially during the pandemic. In its most recent quarter, comparable sales plunged 30% and it reported an adjusted net loss of $76.2 million or $1.17 per share.

Koss, meanwhile, entered the new year with about a third of its float sold short. That stock also caught the attention of WallStreetBets traders in recent weeks and surged as much as 30 times in less than a week, though it's since fallen sharply from its peak of $127.45 last Thursday. Unlike Express, however, Koss' business has been in good shape lately as the headphone-maker reported an increase of 18.4% to $4.9 million in its most recent quarter, and earnings per share more than doubled to $0.07 as the company is seeing tailwinds from consumers working and learning from home during the pandemic. Yet the pullback seems to indicate that investors expect the growth to be short lived.

Finally, Stitch Fix hasn't gotten as much attention from WallStreetBets as Express and Koss, but the stock has benefited from similar momentum in the form of a short squeeze. Thirty-seven percent of the stock was sold short as of Jan. 15, and shares of the personalized styling service have historically been volatile due to high short interest. The stock jumped 63% last month on little news, a sign that a squeeze was pushing up the price. However, shares cooled off for the second session in a row today as Stitch Fix was again downgraded after running hot on the short squeeze. Stifel analyst Lamont Williams lowered his rating from buy to hold, a reflection of the stock's recent gains, though he also raised his price target from $64 to $83.

Now what

Today's losses should be a reminder that easily gotten gains are also easily given back and that stock movement without a change in the underlying business is often short lived. While the overall volatility sparked by the WallStreetBets crowd continues, investors should tread carefully with stocks like these that have already been squeezed.