Amid a rather impressive speculative surge today in a number of meme socks, Bed Bath & Beyond (NASDAQ:BBBY) has also seen some impressive price action. At its highs earlier today, BBBY stock surged more than 14% higher, despite a lower overall market. Right now, most of those gains have been pared, with Bed Bath & Beyond now trading up only 1% as of 2:00 p.m. Eastern.
That said, BBBY stock is in the green. On a day like this, that’s rather impressive. And perhaps it’s something to celebrate, with the retail crowd not giving up on their favorites like Bed Bath & Beyond.
As a favorite of retail investors (both investors who aren’t in the institutional bucket and those who favor retailers), Bed Bath & Beyond has been a fun stock to watch. This stock has surged from pandemic lows below $4 per share to nearly $54 per share at the peak of the previous meme-stock bubble. Since then, shares have trended in the opposite direction, now back to single-digit territory.
The pandemic reopening thesis with Bed Bath & Beyond didn’t really play out as many expected. In some respects, increased confidence in retail stocks in general has helped BBBY stock and its competitors. However, with the economic outlook increasingly uncertain given the rising rate environment we’re now in, investors aren’t so certain. Accordingly, volatility has manifested mostly to the downside of late.
With that said, let’s dive into one more potential headwind investors should be watching right now.
Could BBBY Stock Be Headed for Bankruptcy?
In addition to the aforementioned headwinds, Bed Bath & Beyond is a stock that’s been in financial trouble for some time. The company’s balance sheet isn’t what many would call pristine. And given what one analyst is calling “deteriorating financial performance,” it’s possible investors may need to “seriously consider ‘endgame’ scenarios” with BBBY stock.
That’s according to Anthony Chukumba of Loop Capital, who chimed in on Bed Bath & Beyond with a new note yesterday. In this note, Chukumba reiterated a “sell” rating, as well as a $5 price target on this stock.
Some of the factors playing into this analysis aren’t good. Chukumba believes that the company may be limited in the levers it has to pull to regain market share and improve the relevance of this company. Accordingly, this analyst sees the potential for a Chapter 11 bankruptcy filing as a very real scenario.
That’s not good for any stock. And while some investors may have been thinking this themselves, seeing it in a note certainly isn’t encouraging.
On the date of publication, Chris MacDonald 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.
