The wild stock trading craze that has fueled Bed Bath & Beyond’s improbable rally

New York – Sales are cratering and liquidity is under pressure, but Bed Bath & Beyond’s stock is soaring. Why?

Because self-styled “Reddit apes” and other social media traders are showering their attention on Bed Bath & Beyond, pushing BBBY shares up nearly 40% yesterday. Like GameStop and theater chain AMC, Bed Bath & Beyond is a current meme trader favorite – and its price has more than doubled in the past week.

“These investors are hoping to punish professional hedge funds and big institutional firms who have bet against these stocks by short-selling them. Short sellers profit when a stock goes down,” according to a report from CNN Business.

BBBY stock opened at $8.16 on Aug. 8, quickly shot up to $12.24, peaked at $13.05 and closed at $11.41.

As of midday Monday, Bed Bath & Beyond was the most searched name on Reddit’s WallStreetBets discussion board, CNBC reported, citing Quiver Quantitative data.

One user on Reddit’s WallStreetBets discussion board said he or she had taken out a $27,000 loan to buy BBBY stock, and another claimed to have made $450,000 on Bed Bath shares using call options, according to CNBC.

The company last generated a positive sales gain in the first quarter of 2021, and sales declines have been running over 20% in each of the subsequent four quarters. Last month, Moody’s Investor Services whittled down Bed Bath & Beyond’s credit grade three levels to Caa2 on concerns that negative sales and profit trends would hurt the retailer’s cash flow, liquidity and debt.

Bed Bath & Beyond is reportedly seeking a liquidity boost from the private credit sector while it continues its search for a permanent CEO. Interim CEO Sue Grove said recently that the company will provide an update on its turnaround plan in late August.