Bed Bath & Beyond shares jump after bankruptcy announcement
After news of the company’s plans to seek bankruptcy protection, shares of Bed Bath & Beyond (NASDAQ:BBBY), popular among retail traders, jumped in early trading on Wednesday, extending their rebound from multi-decade lows hit last week.
About 25% up at $2.60, the stock was the third most actively traded across U.S. exchanges. It has increased by about 60% this week.
Other popular stocks among retail traders, such as GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC), also rose on Wednesday, with respective gains of 6.8% and 10.8%.
On Tuesday, Bed Bath & Beyond reported a wider-than-expected quarterly loss and said it would lay off more employees to reduce costs. This comes days after the struggling U.S. home goods retailer announced its intent to explore options including bankruptcy.
On Friday, the company’s shares reached their lowest level since early 1990s, at $1.27, following potential bankruptcy news.
Victoria Scholar, head of investment at Interactive Investor, said that speculation that Bed Bath & Beyond could be an M&A target for an opportunistic buyer, combined with its cost cutting measures, have helped support the stock.
The stock is still down 60% over the last 6 months, however the risk of bankruptcy remains.
The stock was the second most traded on Fidelity’s retail platform on Tuesday.
According to Ortex data, as of Monday, Bed Bath & Beyond has approximately 38.6% of its shares under short position.
On online forums nearly two years ago, retail punters banded together and bid up Bed Bath & Beyond’s shares, costing bearish hedge funds billions of dollars.
The shares, which were at $53.90 at the height of meme stock frenzy in 2020, have plunged about 96% from that level and lost 83% last year alone.