Bed Bath & Beyond Inc. jumped for third straight session on Wednesday, more than wiping out a 46% drop last week after the home-goods retailer warned that it may need to file for bankruptcy.
(Bloomberg) — Bed Bath & Beyond Inc. jumped for third straight session on Wednesday, more than wiping out a 46% drop last week after the home-goods retailer warned that it may need to file for bankruptcy.
The stock climbed as much as 67% to $3.46, the highest intraday level in more than a month, adding to gains earlier in the week. Its share rose 24% on Monday and 28% on Tuesday, even after Bed Bath & Beyond reported a wider net loss than expected, which underlined the likelihood of a bankruptcy filing soon. About 99 million shares changed hands on Wednesday, more than 12-times the average for the past month.
Other so-called meme stocks were also on the rise Wednesday, with AMC Entertainment Holdings Inc. gaining as much as 23% and GameStop Corp. advancing 13%. Carvana Co. also jumped as much as 30% while Arrival gained 25%. Investors have been snapping up shares of beaten-down stocks to start the year with a Bloomberg-compiled basket of meme stocks up more than 9% in 2023.
Retail traders have been steady buyers of Bed Bath & Beyond since the warning of a potential bankruptcy last week. All told, the group has snapped up $6 million of shares since the markets close on Jan. 4, adding to the $601 million they’ve piled in since the meme stock mania began two years ago, Vanda Research data show. While their support has been steady, it pales in comparison to purchases of stocks like Tesla Inc. and Apple Inc.
Short interest in the stock has been rising and stands at about 52% of float, up from 47% one month ago, data from analytics firm S3 Partners show.
Wall Street analysts have started to drop coverage of Bed Bath & Beyond given the increasing likelihood of a bankruptcy filing. Three brokerages tracked by Bloomberg have stopped covering the stock, with Raymond James becoming the latest on Wednesday.
“With a market cap of ~$190 million and fears surrounding potential bankruptcy, there is not enough institutional relevance for us to continue coverage,” analyst Bobby Griffin wrote in a research note. “Raymond James has covered Bed Bath & Beyond continuously since prior to 2000, so our decision to terminate coverage was not taken lightly.”
The stock has no buy recommendations, three holds and 10 sells, according to data compiled by Bloomberg. The average 12-month price target among analysts is $1.67. Wedbush slashed its Bed Bath & Beyond price target to $1 from $5 in a research note on Tuesday, calling out the retailer’s bleak liquidity position and inventory woes. Last week, KeyBanc Capital Markets said that Bed Bath & Beyond shares are only worth a dime.
Bed Bath & Beyond stock volatility has been elevated since the company captured the interest of retail traders, who began buying shares in early 2021 in a coordinated effort channeled through social media platforms. Shares are down 94% from a January 2021 peak of $52.89 amid the meme-stock frenzy.
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