Bed Bath & Beyond shares surge 35% with meme traders rallying behind the ... trends now
Bed Bath & Beyond shares surged by more than a third on Wednesday after meme traders rallied behind the struggling big box store as it prepares for bankruptcy.
The velocity of shares traded in Bed Bath & Beyond has rocketed since Monday when more than 336million were bought and sold. On Tuesday, 300million shares were traded and on Wednesday the volume hit a staggering 939million. To put that in context, its average daily volume over the last 65 days is 99million.
Its price hit 55 cents Wednesday and has surged by double digits over the last three days after closing at 24 cents last Friday. The increase comes despite reports this week that it will file for bankruptcy within the coming days after a post-pandemic retail apocalypse swept the nation.
The number of messages mentioning the flailing company was 'extremely high' and overall sentiment ranked 'extremely bullish' over the last 24 hours on StockTwits, a social media platform for retail investors.
'Bullish Maximus!' said one user mentioning the retailor alongside a rocket emoji.
The price hit 55 cents Wednesday, more than double the 24 cents its price hit at close Friday. It saw a slump on Thursday morning, perhaps indicating the three-day rally was cooling off
A Bed Bath and Beyond store in Clifton, New Jersey, in February. While it once owned more than 1,500 locations across the country, it previously announced plans to end the year with just 480
A bullish investor posting Thursday morning about his sentiments on Bed Bath and Beyond using its ticker BBBY on social media site Stocktwits
Meme investors pile in when there is social media hype, often around a failing company where they can operate collectively to trigger short squeezes - forcing those who are betting against the stock to bail out of their positions.
Almost a fifth of Bed Bath & Beyond shares have been shorted by institutional traders. By comparison, less than one percent of Apple's shares are shorted.
In pre-market Thursday the stock was down 20 percent, indicating that this week's surge could have been more of a pump-and-dump than a short squeeze.
Tommy Tranfo, head of community at Stocktwits, speculated that bullish traders might see bankruptcy as the company's best chance of surviving, while bearish investors will also play a role in pushing the price up.
'Filing for bankruptcy often sparks a short covering rally, as bearish investors don't want to risk their profits in an attempt to squeeze the last bit of juice out of the stock,' Tranfo told Barrons.
Once the go-to retailor for wedding presents, Bed Bath & Beyond recently said it would need to find $300million in share sales by April 26 to avoid chapter 11 bankruptcy, also known as 'reorganization' bankruptcy.
But as of April 10, the company had reportedly raised just $48.5 million from stock sales. With 178 million shares still available at the time, and a Wednesday stock valuation of just 46 cents at closing, selling the remainder of its shares would fail to net the retailer more than $80 million.
Over the last few months, several thousand users on wedding services platform Zola have axed Bed Bath & Beyond products from their wishlists.
The number of Zola registries with the retailer's items is down by more than half compared to last year, according to Bloomberg.
A store manager in New Jersey told Insider that at its peak around 10 to 12 couples would set up their wedding
