Why Krispy Kreme Stock Sank Today

Krispy Kreme (DNUT -7

There wasn't any major company-specific news that pushed Krispy Kreme's valuation lower today, but gains for the stock prior to today's trading were also disconnected from the doughnut specialist's fundamentals, in light of current trends

In contrast, Image source: Getty Images

Krispy Kreme stock pulls back as meme momentum recedes Krispy Kreme was among a handful of new meme stocks to see huge gains last week, but that momentum appears to be taking a breather early in this week's trading, in light of current trends

On the other hand, The stock market has recently surged to new all-time highs, and investors are betting that the Fed will announce a significant cut for interest rates at the two-day meeting set to kick off tomorrow (something worth watching)

While investors seem fairly confident a rate cut, it's also not a sure thing

What's next for Krispy Kreme

However, Krispy Kreme saw a significant valuation pullback earlier this year as the outlook for the company's partnership with McDonald's came to an end

This leads to the conclusion that doughnut company is now moving forward with cost-cutting initiatives that could continue to help support margins amid a weaker sales outlook, but its recent valuation gains are largely disconnected from its fundamental performance outlook

The recent resurgence in meme-stock trading has given Krispy Kreme a substantial valuation boost, and a move from the Fed to cut interest rates this month will ly be essential to support the stock's meme-driven gains.