Don’t doubt the optimism of meme stock investors.
Bed Bath & Beyond, which a week ago issued a statement saying that “there are doubts about the Company’s ability to continue as a going concern,” saw its stock price rise for the second day in a row.
Shares opened 21% higher on Friday, at 10:15 a.m. ET. That follows a 69% increase on Wednesday and gains of 28% on Tuesday and 24% on Monday.
Since issuing the warning, in fact, the company’s stock has, at times, increased by more than 200%.
What in the name of short sales going on?
As you can imagine, retail investors are behind the surge. Speculation abounds in the Reddit r/WallStreetBets community and other hubs that despite the company’s predictions, Bed Bath & Beyond will be able to avoid bankruptcy.
That causes the short seller to cover the bet. Short interest in the company is now about 50% of the stock, compared to an average of 5% in other companies.
While the stock has risen steadily, Bed Bath & Beyond hasn’t changed the tone it’s adopted. The company announced plans Tuesday to close an additional 62 stores, bringing the total to 120 when added to the closings announced last September. The company, in a brief earnings report, said sales plunged 33% in the fourth quarter of last year compared to last year, and ended the holidays with only $153 million in cash.
“The Company continues to consider all strategic alternatives including debt restructuring or refinancing, 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 Bankruptcy Code US,” Bed Bath & Beyond said last week. “These measures may not be successful.”
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