Bed Bath & Beyond surges again on Wednesday, continuing August meme rally

The wild trading in Bed Bath & Beyond showed no signs of slowing down on Wednesday, as the retail stock spiked on heavy volume while social media users cheered on the meme stock.

Shares of the challenged retailer surged 29% in premarket trading, building on its enormous gains for August. Bed Bath & Beyond has already seen five days in August with moves greater than 20%, and ended Tuesday up nearly 300% for the month.

The volume of trading in Bed Bath & Beyond has also been abnormally high. On Tuesday, more than 395 million shares traded hands, according to FactSet.

For comparison, no day in July had a single day with even 20 million in trading volume.

The massive swings appear to be a continuation of the meme trading craze that gripped Wall Street last year. Retail investors other traders focus on bidding up stocks that have high short interest, in hopes of creating a squeeze situation where hedge funds who have bet against the stock are forced to close out their positions and push shares even higher.

The nexus of phenomenon again appears to be the Reddit page Wall Street Bets. Data from Quiver Quantitative shows that Bed Bath & Beyond has been the most mentioned stock on WSB over the past week by far, with roughly five times the post volume of GameStop, the main meme stock in the 2021 craze.

“OG WSB is back,” said one post on the Reddit from user SurrogateHair.

The meme trade had gone largely quiet this year as the broader markets struggled, but the S&P 500 up sharply from its June lows, retail traders appear to have growing confidence.

“I think everybody got the bug again. There’s a big demand for speculation, and it’s back. It may be short-lived, but it’s back,” Tastytrade founder Tom Sosnoff said on “Squawk Box.”

Bed Bath & Beyond is connected to GameStop through Ryan Cohen, the billionaire who serves as GameStop’s chairman. On Monday, a regulatory filing from Cohen’s venture capital firm RC Ventures showed that he had bought distant out-of-the-money call options on Bed Bath & Beyond. The options serve as bets that the stock will rise significantly before January, allowing Cohen to then buy shares at a discount.

Cohen has built a large stake in Bed Bath & Beyond and owned roughly 12% of the stock as of late March, according to FactSet.

After he revealed his position earlier this year, Bed Bath & Beyond agreed to add three board members of Cohen’s choosing. The company also replaced pushed out its CEO Mark Triton in June, with independent direction Sue Grove taking the reins on an interim basis.

— CNBC’s Yun Li and Lauren Thomas contributed to this report.