BBBY Stock Alert: Investors Bet on a Squeeze Despite Looming Bankruptcy

  • Bed Bath & Beyond (BBBY) stock is up 30% today as investors execute a short squeeze.
  • This short squeeze comes despite Bed Bath & Beyond warning that it could file for bankruptcy shortly.
  • Bed Bath & Beyond released earnings on Jan. 10 that showed mounting losses.
Bed, Bath & Beyond (BBBY) storefront with trees in front
Source: Shutterstock

Bed Bath & Beyond (NASDAQ:BBBY) stock is up a staggering 30% today as retail investors bet on a short squeeze despite warnings that the company could file for bankruptcy soon.

In a statement released on Jan. 5, Bed Bath & Beyond said that it likely will not have the cash to cover expenses like lease agreements or payments to suppliers in the coming weeks. As a result, the company is exploring options, including a potential bankruptcy filing. However, this news doesn’t seem to have dissuaded retail investors from attempting a short squeeze with BBBY stock.

Here’s what investors should know as shares move today.

What’s Happening With BBBY Stock?

News of a potential bankruptcy had sent BBBY stock down 30% on Jan. 5, the day of the announcement. Shares closed that day at $1.69. At the time, the stock had plummeted nearly 90% over the last 12 months as well. Now, though, the stock is staging a huge rally as retail investors conduct a short squeeze.

In a news release, Bed Bath & Beyond said it’s having trouble filling its shelves with merchandise and drawing customers to its stores and website, leading to financial difficulties. The retailer is also having trouble refinancing its $1.2 billion in unsecured debt.

All of this means that Bed Bath & Beyond could file for bankruptcy protection imminently.

Why It Matters

Bed Bath & Beyond has been plagued by internal strife for months now. The company’s CEO and other top executives left the company last summer. Bed Bath & Beyond has also undertaken massive layoffs and closed more than 100 stores. Last September, the company dealt with the tragic death of CFO Gustavo Arnal as well.

Yesterday, Bed Bath & Beyond also announced dismal earnings which showed a $393 million loss during the fiscal third quarter. This marked a 42% year-over-year (YOY) increase. Bed Bath’s net losses now exceed $1.12 billion for the first nine months of its current fiscal year.

This not the first time that BBBY stock has been caught in a short squeeze. As one of the original meme stocks, it has been squeezed higher on multiple occasions by retail investors only to fall back to earth.

At this point, Bed Bath & Beyond looks like a lost cause, both as a company and an investment. The current rise in its share price is sure to be temporary as retail investors pump and dump the stock. With a bankruptcy filing looking increasingly likely, investors should steer clear of BBBY stock for fear of losing their money.

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On the date of publication, Joel Baglole did not hold (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 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.

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