FBI Director Patel calls Krispy Kreme stock a 'buy' and sets off a rally

FBI Director Kash Patel spurred a rally in Krispy Kreme shares yesterday, September 17, after he said they were a solid investment and that he had invested tens of thousands of dollars in the stock. Krispy Kreme ended the day with a 12% gain.

Hours into his second day of testimony in Congress, Kash Patel, the FBI director, sparked one of the more unusual stock rallies of the year. While testifying before the House Judiciary Committee about the Charlie Kirk assassination, Patel was asked about his decision to purchase individual stocks, including Krispy Kreme and semiconductor company ON Semiconductor, and the FBI director said he thought they were good buys.

"I just follow certain industries, and I thought they would be a good investment," he added.

Day-traders, apparently, listened. Within minutes, Krispy Kreme stock was up 12.0% and ON Semiconductor 4.1%, Bloomberg reports. The stocks closed the day up roughly 1.0% and 0.5%, respectively, amid a broader market selloff following the Fed rate cut. They are up 6.0% and 1.4% in premarket trading today as of this writing.  

The exchange about the FBI director’s investments comes after members of the House introduced a bill to ban members of Congress from trading stocks. Yesterday, Patel said he would work on the bill with one of the its sponsors, CNN writes.  

Federal employees are allowed to trade stocks and are subject to disclosure and ethics requirements. Patel said he submits proposals under Department of Justice guidance before purchasing stocks.

Patel purchased $15,000 to $50,000 worth of Krispy Kreme shares on May 9, according to financial disclosures filed this summer with the Office of Government Ethics. In addition to Krispy Kreme shares, Patel on May 12 bought $50,000 to $100,000 worth of shares in ON Semiconductor, CNN reports. Krispy Kreme shares have risen about 15% since Patel picked up the stock in May, and ON Semiconductor 12%. 

That the director of the FBI can move stocks, with seemingly the most anodyne of comments, illustrates the sway on markets that crowds of amateur traders now have, Bloomberg writes. They have bid up meme stocks and obscure crypto currencies and SPACs and, more recently, shares associated with President Trump and his inner circle. Patel, who’s been a loyal Trump supporter for years, was appointed to run the FBI shortly after last year’s election.

This is not the first time Krispy Kreme shares have seen sharp intraday gains. In July, they were swept up in another wave of meme stock mania, as retail traders piled into beaten-down stocks despite no apparent changes in their fundamentals. Since the start of the year, the doughnut maker’s shares have lost nearly 70% of their market value.

Steve Sosnick, chief strategist at Interactive Brokers, said that even though Krispy Kreme as a company is more than just a meme stock, the rally exemplifies the momentum-driven trends in markets this year. In his view, "there’s a difference between investing and just sort of chasing stories, and this falls into the latter."

"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," Sosnick added.

The AI translation of this story was reviewed by a human editor.