Meme stock mania isn’t dead quite yet. Now-defunct retailer Bed Bath & Beyond (OTCMKTS:BBBYQ) is seeing some impressive price action today. Currently, shares of BBBYQ stock are up more than 26% in today’s session. Over the past week, shares of this embattled retailer have more than tripled, suggesting there’s still some interest in this company among the most aggressive speculators.
Interest on social media has continued, with many speculators suggesting that a short squeeze could be brewing in BBBYQ stock. Of course, in order for short sellers to lock in their impressive gains (at their 52-week high, shares traded at $30 apiece), they will need to buy back their positions. Accordingly, a bet that this stock will decline from the 18-cent level is riskier than betting on a decline from around $30 per share.
Exactly what Bed Bath & Beyond is still worth is unclear, given the company’s status as a company in Chapter 11 protection. That said, some reports suggest other retailers may look to pick up bricks-and-mortar assets, to expand their footprint.
Let’s dive into what investors may want to make of this recent rally.
Is BBBYQ Stock Worth a Speculative Buy?
There are a couple of intriguing reasons why speculators may be enticed to pick up some shares of this bankrupt retailer.
As mentioned, if a deal can be worked out for Bed Bath & Beyond to sell some core assets, restructure its debt, and operate as an asset-light business model, perhaps some equity portion can be saved. Indeed, if BBBYQ shares aren’t entirely worthless, the question becomes just how much an investor might pay for a share in this struggling retailer.
That’s the fundamental case many appear to be taking right now. But fundamentals aside, there’s also the idea that short-covering could lead to continued near-term rallies in the stock. I suspect that’s the primary reason driving shares of BBBYQ stock higher over the past week.
Indeed, this stock has just become very difficult for short sellers to continue holding their positions. As such, it’s entirely possible this rally could continue for some time. How long and how high BBBYQ stock ultimately trends is the key question.
Personally, there’s way too much hair on this stock for me to consider trading it either way. That said, I’ll be keeping an eye on how speculative momentum drives the company moving forward.
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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.
