BBBY Stock Squeezes Higher as Investors Look to Cash In on Kroger Partnership

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A new partnership with grocery retailer Kroger (NYSE:KR) has shares of Bed Bath & Beyond (NASDAQ:BBBY) skyrocketing more than 50% in pre-market trading today.

The front view of a Bed Bath & Beyond (BBBY) retail location in Indianapolis, Indiana.

Source: Jonathan Weiss / Shutterstock.com

The sharp rise is welcome news for Bed Bath & Beyond shareholders who have had to endure a 33% decline in BBBY stock over the past six months.

After being targeted as a meme stock earlier this year and seeing its share price spike to nearly $54 in late January, Bed Bath & Beyond has corrected sharply. Shares closed yesterday’s trading session at $16.75.

What Happened With BBBY Stock?

Bed Bath & Beyond shares are soaring after the Union, New Jersey-based company announced a handful of news items that included the launch of a digital marketplace that will sell goods from third parties, as well as a partnership with Kroger. Additionally, Bed Bath & Beyond said its stock buyback program is ahead of schedule, and the retailer announced several leadership changes.

However, it appears the main reason that BBBY stock is up more than 50% is that it is caught in a short squeeze. This would not be a first — BBBY caught retail investor love alongside peers GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) earlier in the year. But why now? It appears Bed Bath & Beyond is still among the most heavily shorted stocks on Wall Street with 27% of its shares available for trading sold short.

BBBY stock is currently the third most-shorted stock among the 1,500 largest U.S. publicly traded securities, according to data from FactSet.

Why It Matters

The moves being made by Bed, Bath & Beyond are getting praise from analysts who have watched as the retailer has struggled in recent years. Even before the pandemic, Bed Bath & Beyond had struggled with declining sales and mounting losses.

These days, CEO Mark Tritton has been trying to turn things around. He has closed underperforming stores and rolled out private-label brands, borrowing on lessons learned at Target (NYSE:TGT).

However, there are concerns that BBBY stock might once again be targeted as a meme play. The stock is getting a lot of mentions on r/WallStreetBets currently, and this isn’t the first time that Bed, Bath & Beyond’s stock has skyrocketed only to fizzle within a few trading sessions.

Obviously, the company is hoping that the current rally is being driven by its tie-up with Kroger, the largest supermarket chain in the U.S. Under the new deal, Kroger will sell Bed, Bath & Beyond’s home and baby products in its stores and online beginning in 2022.

As part of the rush of news, Bed Bath & Beyond also named Anu Gupta as its chief growth officer, a new position.

What’s Next for Bed Bath & Beyond?

It remains to be seen if today’s big jump in BBBY stock is the result of the news, or if Bed, Bath & Beyond is again being targeted for a coordinated pump by aggressive retail investors. The best move here would be to stay on the sidelines and watch to see just how high BBBY stock rises and if the gains hold.

The announcements made yesterday, while interesting, don’t immediately impact Bed, Bath & Beyond’s financial performance, increasing the likelihood that BBBY stock is back in meme territory.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2021/11/bbby-stock-squeezes-higher-as-investors-look-to-cash-in-on-kroger-partnership/.

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