Never doubt the optimism of the meme stock investor.
Bed Bath & Beyond, which one week ago issued a statement saying “there is substantial doubt about the Company’s ability to continue as a going concern,” is seeing its stock price soar for the second day in a row.
Shares opened 21% higher Thursday, as of 10:15 a.m. ET. That follows a 69% increase on Wednesday and gains of 28% Tuesday and 24% Monday.
Since issuing its warning, in fact, the company’s stock has, at times, increased more than 200%.
What in the name of short sales is going on?
As you might guess, it’s retail investors who are behind the surge. Speculation is rampant on Reddit’s r/WallStreetBets community and other hubs that despite the dire forecast from the company, Bed Bath & Beyond will managed to avoid bankruptcy.
That has led short sellers to cover those bets. Short interest on the company currently stands at roughly 50% of shares, compared to an average of 5% on other companies.
While the stock climbs steadily, Bed Bath & Beyond is not changing the dire tone it has adopted. The company announced plans Tuesday to close an additional 62 stores, bringing the total to 120 when added with closures announced last September. The company, in a brief earnings report, said sales plunged 33% in the fourth quarter of last year compared to a year ago, and it ended the holidays with just $153 million in cash.
“The Company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code,” Bed Bath & Beyond said last week. “These measures may not be successful.”
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