Bed Bath & Beyond and AMC Entertainment surged Monday as meme traders seemed to be betting on the stock despite the lack of any apparent catalyst for the move.
Shares of both heavily shorted stocks closed up nearly 40% and 8%, respectively. GameStop also climbed 8.6%. At one point in the session, Bed Bath & Beyond shares soared as much as 63%. Bed Bath & Beyond shares posted their biggest one-day gain in more than a year.
As of midday Monday, Bed Bath & Beyond was the most searched name on Reddit’s WallStreetBets discussion board, according to Quiver Quantitative. Users under a pinned thread titled “GME, BBBY and AMC Memestock Megathread for Monday August 8th, 2022” appeared to be buying up shares of the retail stock.
One user said they “took out a 27k loan, went all in on BBY,” which a group moderator seemed to confirm. Another user (TheDude0007) alleged to have capitalized on the BBBY spike, turning $45,000 into almost $450,000 using common stock and call options.
All three stocks have been a part of the meme stock craze that has hit Wall Street in recent years and driven these names higher as investors bought up shares and forced short sellers to attempt to cover their losses, creating what’s known as a “short squeeze. ” According to data from FactSet, a whopping 46% of the stock’s float is sold short.
As many retailers cope with inflation-wary consumers and excess inventory, Bed Bath & Beyond has struggled to reverse declining sales, fix its merchandising strategy and gain back customers who have fled to its competitors. It’s also been searching for a new leader after the board announced in late June that CEO Mark Tritton had left the company.
At the same time, the Union, New Jersey-based home goods retailer has also been burning through cash as its net losses grow. While the company has not provided a forecast, it said it expects same-store sales trends to improve after plummeting 24% year over year in the quarter ended May 28.
— CNBC’s Melissa Repko and Jack Stebbins contributed reporting.