The 75% Increase at Bed Bath & Beyond Continues Massive Rally, Defying Bears

As experts lower the stock, shares have increased by 349 percent.

Short sellers suffered paper losses of $662 million this month.

The 349 percent three-week increase by Bed Bath & Beyond Inc. defies warnings from Wall Street banks about the firm’s high valuations and has rekindled a wave of meme stock buying.

The stock continued to rise on Tuesday, reaching an all-time high of 79 percent, before surrendering some of its gains and finishing at $20.65 following two trading halts. 385 million shares were moved, more than 20 times the three-month average, making it the most frequently traded stock, according to Bloomberg statistics.

Even though the home products business was downgraded by at least three Wall Street banks, who also advised investors to sell their shares amid the “meme stock craze,” the surge has occurred anyway.

The retailer’s $1.65 billion valuation was deemed “unrealistic” by Susan Anderson of B Riley Securities, who earlier on Tuesday downgraded her recommendation from neutral to sell. Before the stock’s most recent spike, Baird’s Justin Kleber downgraded shares, saying that the “fundamental risk/reward seems unappealing” with market share losses intensifying and the firm haemorrhaging cash.

According to data gathered by Vanda, none of that was enough to halt the retail trading crowd’s flurry of purchasing, which has pumped $99 million into the company since July 26. The figures reveal that the stock surged 24 percent on Monday to close at its highest level since late April, contributing a record $46 million to the net inflow.

Some investors are betting that the shares will continue to increase. According to statistics provided by Bloomberg, call options betting on the stock to trade over $45 by the end of the week and other contracts betting on a climb to $80 by mid-January were among the most active derivatives linked to the stock.

Meme Frenzy

According to data from analytics company S3 Partners, mark-to-market paper losses on short positions in Bed Bath & Beyond have totaled $662 million this month, including a $218 million loss on Tuesday. Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, described the stock as “extremely squeezable” in light of the numerous short positions and predicted that it would rise even more as short sellers were compelled to cover their wagers.

Comrade meme stocks AMC Entertainment Holdings Inc. and GameStop Corp. also experienced a surge in activity. The operator of movie theatres reversed losses to increase by 2.5 percent, but the retailer of video games jumped by as much as 15 percent, causing a trading stop.

On Fidelity’s platform, purchase orders for Bed Bath & Beyond more than quadrupled those for Tesla Inc., making it the most actively traded asset.

Its ticker was trending on the popular chat room StockTwits and received the most mentions on Reddit’s WallStreetBets.

The company’s debt increased on Tuesday, rising along with the shares and ranking among the top gainers in the high-yield market. 

Despite the increase, the stock is still down 61 percent from its January 2021 top, and analysts anticipate further declines. According to Bloomberg statistics, the average 12-month price prediction of $4.49 suggests a decrease from current levels of about 80%. The majority in at least ten years, two-thirds of experts now advise selling shares.

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