Shares in Bed, Bath & Beyond (NASDAQ:BBBY) rose 8% before the market opened Aug. 15, spurred by a short squeeze and a meme trade. BBBY stock was up nearly 22% on Aug. 12, making the 8% overnight gain more notable.
Ryan Cohen, the Chewy (NYSE:CHWY) cofounder who rode the 2021 meme stock wave to chairing Gamestop (NYSE:GME), got three BBBY board seats early this year after buying nearly 10% of the stock. Additionally, it is currently heavily shorted. Outside major exchanges, almost half the shares are held short as fundamental analysts predict it’s headed to $1.
BBBY stock opened today at about $14 per share.
What’s Going On?
The last month’s rally in the stock market, with the S&P 500 up 13% and the Nasdaq up 16%, has lifted all boats. Value stocks are up and tech stocks are up, but so are cryptocurrencies and meme stocks.
BBBY was a “secondary” meme stock in the 2021 run-up. It went as high as $35 per share in early 2021, up from $12 in early September 2020. At the time, there was hope for the turnaround plan of then-CEO Mark Tritton, a former Target (NYSE:TGT) executive.
But 2022 dashed those hopes. Tritton was let go in June as sales plummeted.
Cohen signed a cooperation agreement with the company in March, taking 3 board seats on the premise management would look at “strategic alternatives” like selling its successful Buybuy Baby chain. After the cooperation agreement was signed, the stock fell from more than $25 per share to a low of $5 in early August.
What Happens Next for BBBY Stock
Short squeezes and meme stock run-ups don’t last long. Those who got into the BBBY stock rally early have more than doubled their money in two weeks. But the company’s fundamentals haven’t changed. It’s still shrinking, it’s losing money and its value proposition has become dubious.
If you do buy, keep a close eye on your position and be ready to leave it quickly when the music stops.
On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
