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Bed Bath & Beyond stock has traded at a higher volume for the past three days.
Joe Raedle/Getty Images
Bed Bath & Beyond
stock was on track for a three-day winning streak, with the shares up double-digits on Wednesday.
The meme stock trade made a comeback—and may be rallying behind a potential bankruptcy filing.
Bed Bath (ticker: BBBY) was trading 32% higher at 45 cents as of latest check. This is the third day the embattled retailer’s stock has notched double-digit gains. To be sure, since
Bed Bath & Beyond
trades under a dollar, any increases or decreases to the stock price—no matter how small—can lead to big percentage changes.
Still, the stock closed at 24 cents on Friday, meaning that the price has nearly doubled as of Wednesday’s intraday price of 45 cents. The shares have seen higher volume these last three days. On Monday, more than 336 million shares traded hands; on Tuesday, 300 million, and on Wednesday morning, 222 million. Bed Bath’s average trading volume is 88 million shares. Wednesday’s trading volume was about 2½ times the average.
Much of that movement can be traced back to renewed interest from meme stock traders. Message volume mentioning Bed Bath stock was “extremely high” over the last 24 hours on Stocktwits, a retail trading social media site. Meanwhile, retail investor sentiment was “Extremely bullish,” according to Stocktwits.
“Bullish Maximus!!!” said one user’s message on the platform, topped off with a rocket emoji.
Both sentiment and message volume had seen an uptick on Stocktwits’ platform on Tuesday and Wednesday compared with last week, said Tommy Tranfo, head of community at Stocktwits, in an email to Barron’s.
Tranfo speculates that investors may be rallying behind a potential bankruptcy filing. Bullish investors could see a reorganization as the company’s best shot for surviving, he said, but bearish investors will also play a role in the rally.
“Filing for bankruptcy often sparks a short covering rally, as bearish investors don’t want to risk their profits in an attempt to squeeze the last bit of juice out of the stock,” Tranfo said.
And indeed, the company may be preparing to file for chapter 11 as early as April 26, according to a new Bloomberg report. The retailer is holding talks with advisors and lenders as its latest efforts to raise cash seem to have come up short, the report said.
“BBBY will hit $1,” another Stocktwits user, who goes by the handle Letsgobulls22, posted. “Did you forget HERTZ? $HTZ TIME TO EXPLODE.”
Hertz
(HTZ) stock shot up more than 800% in the days following its May 2020 bankruptcy filing.
Bed Bath didn’t immediately respond to Barron’s request for comment.
The retailer has been warning since January that it was contemplating filing for bankruptcy if it wasn’t able to turn its business around in a short time span. Since then, the company has proposed a series of creative financial maneuvers in a bid to skirt chapter 11.
Its current effort aims to raise $300 million in an equity offering. The company is proposing a reverse stock split to help boost the appeal of its offering. Companies typically undertake reverse stock splits to increase share price. Shareholders are expected to vote on the split in a special meeting May 9.
The company also has a deal with B. Riley Principal Capital. B. Riley agreed to buy $1 billion of newly issued stock. As of April 10, the company had sold the firm approximately 100.1 million shares for about $48.5 million, according to a filing with the Securities and Exchange Commission.
Write to Sabrina Escobar at [email protected]
Source: https://www.barrons.com/articles/bed-bath-beyond-stock-surges-meme-trade-returns-738f6a18?siteid=yhoof2&yptr=yahoo