Bed Bath & Beyond announced a series of changes to its business model, triggering its stock to rise as much as 54% today (Nov. 3), its best performance in five months. The rally was accompanied by a surge in market activity for other companies known as “meme stocks,” which are on track to experience their most successful week since August.
Bed Bath & Beyond unveiled a series of plans to boost its business yesterday after the company lost 30% of its market valuation in September, driven in part by supply chain issues and a slow-down in foot traffic to the home goods stores. The retailer said it plans to buy back $1 billion of its shares by next spring, and announced plans for a new digital marketplace in partnership with Kroger. This sent shares up by more than 80% yesterday, and by 9:30am today they were trading at over $25 a share, up from $16.75 yesterday afternoon.
The home goods store is already a favorite among meme stock traders
Bed Bath & Beyond was part of a group of companies whose stock skyrocketed in January as traders on apps like Stocktwits and Robinhood invested in the firms in the hopes of outsmarting traders and hedge funds that engage in short selling. Amateur investors on forums like Reddit’s r/wallstreetbets targeted companies such as GameStop and AMC Entertainment they considered undervalued, and Bed Bath & Beyond got caught up in the trading frenzy as well. The home goods store’s share prices soared in January before Robinhood and other retail apps started restricting the frenzied meme stock activity.
Over the past year, users on Reddit have offered their opinions as to why they believe Bed Bath & Beyond isn’t such a bad investment. One user called the stock “undervalued and overshorted” in an Aug. 31 post, citing stable profit margins amid the company’s transition to e-commerce as a sign it was poised for “future massive growth.” Another Reddit post about the home goods company proclaimed, “Finally, A Meme Stock That Isn’t An Utter Dumpster Fire.”
Nevertheless the stock has been volatile over the last year and a recent slump in quarterly sales caused it to tank 22% at the end of September. Bed Bath & Beyond CEO Mark Tritton cautioned today the surge was just a “moment in time” in an interview on CNBC. “We’re not in it for the day by day, we’re in it for the long term,” he said.
Bed Bath & Beyond helps boost other meme stocks
As was the case in previous periods of frantic retail trading, Bed Bath & Beyond’s success comes amid a flurry of activity for other meme stocks as well. GameStop shares rose 14% on Nov. 1, three days after the company ousted its chief operating officer Jenna Owens, and shares of AMC, GameStop, and Blackberry all rose along with Bed Bath & Beyond’s rally today.
A group of 37 meme stock companies tracked by Bloomberg jumped to their highest level and is on track to have its best week since August thanks to the heightened trading activity.