Meme investors are back and pushing Bed, Bath & Beyond onto new winning streaks.
Dow Jones Market Data shows shares jumped more than 80% in two days. Even so, shares are down 25% year to date.
|BBBY||BED BATH & BEYOND INC.||11.41||+3.25||+39.83%|
Experts say there is no fundamental reason behind the spike, though Benzinga speculated that AMC Entertainment’s decision last week to issue a special “APE” dividend of preferred shares may have renewed interest in meme investing.
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Bed, Bath & Beyond was the top searched stock during the past one- and seven-day periods on Reddit’s WallStreetBets discussion board, according to Quiver Quantitative.
WallStreetBets 12.4 million members often bet on heavily shorted stocks of down-on-their-luck companies, gambling that short sellers will dump their shares when prices rise. Short sellers make money when a stock continues to fall but can lose large when shares gain.
Nearly half of Bed, Bath & Beyond’s shares are shorted.
More than 10.8 million shares changed hands when the markets opened Monday, and volume continued throughout the day.
The turnaround is share prices is stunning. Shares hit a 52-week low of $4.38 on July 1, and there was speculation that the company could go bankrupt.
Former CEO Mark Tritton left on June 29, along with Chief Merchandising Officer Joseph Hartsig. They were replaced by Sue Gove and Mara Sirhal, respectively.
Gove is a board member and founder of Excelsior Advisors, LLC, a retail consulting and advisory firm. Sirhal previously served as general manager of the company’s Harmon unit.
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The changes came after Bed, Bath & Beyond reported sales fell 25% to $1.46 billion for the fiscal first quarter ended May 28.
The net loss widened to $358 million from $51 million.
The company had benefited from COVID-19 stay-at-home restrictions. Net sales jumped 49% in the first quarter of 2021, but have been slowing since as restrictions eased and people began returning to work.
Sales slipped 26% in Q2 2021, 28% in Q3 2021 and 22% in Q4 2021.
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Moody’s and Standard & Poor’s both lowered their rating on the domestic merchandise retailer last month.
Moody’s said “operating performance is expected to weaken further over the course of 2022 as the company must clear excess inventory while continuing to contend with supply chain and inflation challenges.”
S&P said Bed, Bath & Beyond’s “prospects for normalizing business trends in the second half of the year have diminished.”
Bed, Bath & Beyond helped lift other meme stocks.
|AMC||AMC ENTERTAINMENT HOLDINGS INC||23.96||+1.78||+8.03%|
AMC Entertainment and GameStop are both up.
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Bed, Bath and Beyond did not respond to a request for comment about the spike in its share price.
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