Why Krispy Kreme Stock Skyrocketed Today

Krispy Kreme (NASDAQ: DNUT) stock closed out Monday's trading with big gains. The company's share price rose 9.8% in a day of trading that saw the S&P 500 index and the Nasdaq Composite index rise 0.5% and 0.4%, respectively, and set new record highs. The stock had been up as much as 11.7% before pulling back before the day's close.

In addition to bullish momentum across the broader market, Krispy Kreme stock was pushed higher thanks to inclusion in new indexes. Despite today's pop, the doughnut specialist's share price is still down 71% across 2025's trading.

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Krispy Kreme stock jumps on index inclusion

As part of the annual recombination of Russell indexes that occurs at the midyear point, Krispy Kreme stock has been included in the Russell 2000 Value index, the Russell 2500 Value index, the Russell Small Cap Comp Value index, and the Russell 3000E Value index. Due to the recombination, exchange-traded funds (ETFs) and other funds that track these indexes have to buy Krispy Kreme stock in order to reflect its inclusion.

Along with positive momentum lifting the broader market today, buying action from the new index inclusions helped Krispy Kreme shares see a strong rally today. The stock had also been facing downward pressures recently following the ending of the company's partnership with McDonald's, but shares are now down just 1% over the last month.

What's next for Krispy Kreme?

Krispy Kreme has been struggling to energize its growth engine. The business saw revenue fall roughly 15% year over year to $357.2 million in the quarter, and the business posted a non-GAAP (adjusted) loss per share of $0.05 in the period -- swinging from a profit of $0.07 per share in last year's quarter.

Now valued at roughly $496 million, Krispy Kreme is trading at just 32% of this year's expected sales. While the company may look cheap on that valuation basis, signs that the business' sales and margins can stabilized may be needed in order for the stock to see a sustained rally.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.