Bed Bath & Beyond Jumps 50%, Leads Last Gasp Rally in Meme Stocks; AMC gains 16%

A “Store Closing” banner at a Bed Bath & Beyond store in Farmingdale, New York on Friday, January 6, 2023.

Johnny Milano | Bloomberg | Getty Images

A group of highly speculative stocks gained double digits on Wednesday as retail investors drove meme names higher in the new year after a dismal 2022.

bed bath beyond soared a whopping 50% to start the trend in Wednesday morning trading and shares were last traded 39% higher. shares of GameStopthe original star of meme stock mania in 2021, is up more than 5% after previously gaining over 10%. AMC entertainment increased by 16%.

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warehouse Short Interest % Float To marry. To win % discount on 52 W high
Bed Bath & Beyond (BBBY) 48.9% 60% -89%
AMC (AMC) 21% fifteen% -78%
Game Stop (GME) 21% 8th% -62%

Source: fact set

The rally at Bed Bath & Beyond was originally sparked by news that the company was laying off more employees to cut costs and stay in business.

The housewares retailer informed its employees that it is stepping down the role of chief transformation officer held by Anu Gupta on the same day it reported disappointing third-quarter results. Bed Bath & Beyond nears possible bankruptcy as sales plummet and losses mount.

“We don’t love the strength of nonsensical stocks like AMC, CVNA, GME, BBBY, PRTY, etc.,” said Adam Crisafulli, founder of Vital Knowledge. “It just means that people are chasing blindly.”

In early 2021, a group of retailers banded together on social media to bid on a range of heavily shorted stocks, resulting in massive short squeezes that inflicted great pain on the short sellers. These meme stocks have suffered major setbacks over the past year as risk sentiment shifted amid aggressive rate hikes. GameStop fell 50% in 2022, AMC fell 75%, and Bed Bath & Beyond fell 82%.

While brief interest in these names peaked after the stunning episode, it still remains much higher than average.

About 48% of Bed Bath & Beyond’s float shares are short, according to S3 Partners, compared to an average 5% short holding of a typical U.S. stock. For GameStop, short interest stands at 21%, according to FactSet, up from more than 100% at the peak of meme stock mania in 2021. AMC has also shorted 21% of shares.

A short squeeze occurs when a stock jumps sharply higher, forcing short sellers to buy back shares to cut their losses. The short covering tends to further fuel the stock’s rally. Bed Bath & Beyond Jumps 50%, Leads Last Gasp Rally in Meme Stocks; AMC gains 16%

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