Bed Bath & Beyond rises for third day, lifting other meme stocks

Jan 11 (Reuters) – Bed Bath & Beyond ( BBBY.O ) shares jumped on Wednesday as individual investors piled in, extending the stock’s recovery from multi-decade lows hit last week and rekindling a rally in other meme stocks.

The stock, the third most actively traded on U.S. exchanges and second on Fidelity’s retail platform behind Tesla Inc ( TSLA.O ), rose nearly 50% to $3.13. It’s up about 140% so far this week.

Other popular stocks among retailers also rose, with GameStop ( GME.N ) and AMC Entertainment ( AMC.N ) up 5% and 15% respectively.

Bed Bath & Beyond said Tuesday it would lay off more employees to cut costs after reporting a bigger-than-expected quarterly loss.

Shares of the US home goods retailer last week hit their lowest level since the early 1990s after the company announced its intention to explore options, including bankruptcy.

The short interest in Bed Bath & Beyond is $82.7 million, or 52.07% of the stock, analyst firm S3 Partners said.

S3 Partners noted that there are more retail investors on the long side and heavy institutional activity on the short side that sets the stock up for volatile trades based on momentum rather than fundamentals.

“If bankruptcy is not in BBBY’s future, its rising share price will have short sellers rushing for the doors to hold on to some of the market-to-market gains they made in 2022,” said Ihor Dusaniwsky, managing director of predictive analytics at S3. Partners.

Bed Bath & Beyond options volume was nine times more common based on recent trading, according to Trade Alert data.

Much of the trading interest was focused on near-dated options, with contracts expiring on or before January 20 accounting for about 70% of volume. In a sign that traders expect the stock to remain highly volatile in the coming days, the stock’s 30-day implied volatility, a measure of how much traders expect the stock to swing in the near term, was at 330%, around the highest in at least four years, Trade Alert data showed.

In a meme-stock frenzy nearly two years ago, retail traders bid up Bed Bath & Beyond shares by rallying on online forums, costing hedge funds billions of dollars.

Reporting by Medha Singh in Bengaluru and Saqib Iqbal Ahmed in New York; additional reporting by Bansari Mayur Kamdar and Amruta Khandekar; Editing by Shinjini Ganguli and Maju Samuel

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