Why Is Bed Bath & Beyond (BBBY) Stock Up 20% Today?

  • Shares of Bed Bath & Beyond (BBBY) stock are surging today as speculators pile into this meme stock once again.
  • This rally appears to have been spurred by a recent report from The Wall Street Journal.
  • Investors appear to be siding with the view that capital positions could outweigh poor fundamentals in the near term with BBBY stock.
BBBY stock - Why Is Bed Bath & Beyond (BBBY) Stock Up 20% Today?

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Most stocks have been on a nice tear over the last few trading days, with investors seeming to itch to get back into beaten-up stocks which have felt a tremendous amount of pain thus far in 2022. As it happens, certain meme stocks are also feeling the love today. One notable winner in today’s market is home goods retailer Bed Bath & Beyond (NASDAQ:BBBY). At the time of wiring, BBBY stock has surged more than 20%, greatly outpacing the overall market.

This move appears to be the result of an intriguing report on various troubled retailers out of The Wall Street Journal yesterday. This report dove into the capital positions of various retailers who have been noted to be on the brink. Bed Bath & Beyond is one of the leading candidates for some sort of liquidity event, leading this stock to be highly volatile (and highly shorted).

This company’s relatively high short interest, which stands at around 40% currently, has invited short squeeze enthusiasts to consider piling into this name. In the hopes of causing yet another short covering event, many investors appear intent on making back some of their recent losses with a big win on BBBY stock. Accordingly, it doesn’t appear speculators need much in the way of positive news to drive outsized volatility to the upside in this troubled stock.

Let’s dive into what this report entailed, and why investors in Bed Bath & Beyond are so giddy today.

What’s Going On With BBBY Stock Today?

The Wall Street Journal’s piece from yesterday is one that’s sure to invite some healthy optimism among retail investors. The primary thesis floated by the article is that retailers such as Bed Bath & Beyond have built up a capital moat in recent months, which could protect themselves against what may be a difficult holiday shopping season this year. If that’s the case, bankruptcy discussions could be delayed into next year, providing a more clear pathway for a near-term rally.

That’s all many speculators needed to hear, apparently.

It’s undeniable that retailers such as Bed Bath & Beyond are in dire straights. Business isn’t what it used to be, and the average consumer is clearly stressed right now. Indeed, despite all the talk about healthy consumer balance sheets, the reality is that most of the pandemic-driven stimulus which found its way into savings accounts for many households has long been spent. Credit card balances have surged in lieu, generating most of the spending activity we’ve seen in 2022. Thus, this year, the Grinch could be more prevalent than a generous Santa Claus in many households.

Accordingly, this near-term rally may certainly be a welcome sight for speculators in BBBY stock. However, I think this is a company investors ought to be careful with right now. After all, one day does not a rally make.

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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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