Bed Bath & Beyond is the newest “meme stock” to attract the attention of extremely online investors hoping to make quick money.
Shares of the struggling retailer were trading at less than $5 last month but have rocketed to $25 as of Wednesday morning, a 136% increase over the past five days and a whopping 408% surge over the past month.
The jaw-dropping rally began when it was revealed that activist investor Ryan Cohen, the founder of pet supply retailer Chewy, had taken a 10% stake in Bed Bath & Beyond, a well-known business that has been forced to shutter stores across the country in recent years.
Cohen bought call options expiring in January 2023 on some 1.67 million shares of Bed Bath & Beyond, with a strike price ranging from $60 to $80. The call options are a signal that Cohen is betting that the company’s value will rise over the next few months.
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Cohen made waves in 2020 when it was disclosed that he had taken a 10% ownership stake in GameStop, becoming its chairman. His stake, and ascension to GameStop’s leadership, led hordes of minor investors on the internet forum WallStreetBets (a popular page on Reddit) to drive up GameStop’s stock.
It appears the traders on WallStreetBets have now coalesced around Bed Bath & Beyond and are causing the company’s stock to soar.
Other meme stocks have also risen this week amid the attention garnered by Bed Bath & Beyond’s rally. Blue Apron, a meal kit company, saw shares of its stock rise by more than 60% in the past five days while FuboTV, a streaming company, had its shares increase by 40% in that same period of time.
“You see his name (Cohen) associated, and it gets the buzz going. So right now, social media buzz is flying around Bed Bath and Beyond, and it is spilling over other stocks as well,” Dennis Dick, a retail trader at Triple D Trading, told Reuters.
The comments, some tongue-in-cheek, on a WallStreetBets thread about the Bed Bath & Beyond rally include, “Don’t panic sell if BBBY dips” and “bought 100k shares at $28.06 … BBBY to the moon” and “my portfolios now 100% BBBY.”
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For those wanting to get in on the Bed Bath & Beyond craze, it is worth noting that GameStop, the first meme stock, has seen declines since the zenith of its market frenzy early last year.
The stock peaked at more than $80 during the WallStreetBets rally but is now worth about half that. Nevertheless, the phenomenon has sticking power, considering GameStop shares were valued at about $1 in the summer of 2020, prior to the historic rally.
