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Meme Mania Roars as Bed Bath & Beyond Takes Retail Baton

Bed Bath & Beyond’s Stock Surge Revives Retail-Trader Mania

Excitement that’s triggered a surge in Bed Bath & Beyond Inc. shares after a whirl of announcements has fueled a rally in other retail-trader favorites, causing chatrooms like StockTwits to light up with optimistic comments.

The retailer soared as much as 54% in Wednesday’s trading, the day after releasing plans to help its turnaround. The advance triggered gains in original meme stocks like AMC Entertainment Holdings Inc., GameStop Corp., and BlackBerry Ltd., which each rose at least 5%.

Bed Bath & Beyond was among the many so-called meme stocks that saw meteoric gains turn to pain earlier this year amid concern about the company’s fundamentals. Shares closed at their lowest level in more than a year last week amid muted expectations after quarterly sales missed estimates.

Meme Mania Roars as Bed Bath & Beyond Takes Retail Baton

This week’s resurgence is likely fueled in part by FOMO -- fear of missing out -- and those who have bought into the investing mantra of YOLO -- you only live once. The appetite for risky investments among retail traders appears to be rising, according to Vanda Research. 

Bed Bath & Beyond rallied to $25.72, posting its biggest gain in five months, to lead a Bloomberg-tracked basket of meme stocks to the highest level since mid-July. The gains spread to AMC Entertainment and GameStop and the meme-stock index jumped 4.8% as of 11 a.m. in New York.

Meme Mania Roars as Bed Bath & Beyond Takes Retail Baton

Retail traders pumped up their bets on GameStop and AMC Entertainment with the pair of stocks trending on the chatroom platform Stocktwits, while #GameStop was trending on Twitter. The rallies coincided with a spike in trading activity as more than 46 million shares of AMC Entertainment changed hands while GameStop volume is on pace for its busiest day since August.

Out-of-the-money call options, a retail trader favorite and driver of many meme stock rallies, were among the most actively traded derivatives for AMC Entertainment. Calls that expire on Friday with strike prices of $45 and $50 were among the five most actively traded equity-tied options in the market Wednesday, according to data compiled by Bloomberg.

The red-hot rally comes just a day after Avis Budget Group Inc. more than doubled amid a flurry of retail-crazed trading. While investors cheered the surges, Wall Street analysts voiced warnings that the gains ignore reality. 

Some Skeptics

Loop Capital Markets’ Anthony Chukumba downgraded Bed Bath & Beyond to sell, saying the purveyor of home goods has “lost market share, mind share, and consumer relevance” with none of the updates materially changing his skeptical view on the stock. Avis, which fell more than 15% Wednesday, was downgraded by both JPMorgan Chase & Co. and Deutsche Bank AG, who warned the company’s $20 billion valuation reached Tuesday wasn’t realistic.

To be fair, Wall Street has warned that valuations for cult-favorites like AMC Entertainment and GameStop have been divorced from reality for more than nine months. But that hasn’t stopped retail traders and hedge funds looking to strike it rich quick. 

For investors who got in before the start of 2021, it’s been lucrative, with movie-theater company AMC Entertainment is up nearly 1,900% and GameStop soaring more than 1,100%. Newer meme stocks like the Donald Trump-tied SPAC, Digital World Acquisition Corp., and Ocugen Inc. have returned more than 500% apiece. 

A basket of 37 retail-trader favorites tracked by Bloomberg News has climbed 11% this week, besting a 0.5% return for the S&P 500 Index. The group of stocks preferred by day traders rallied 4.9% on Monday and is on pace for its best weekly performance since late August.

Here are some retail-favorites that are seeing notable gains in Wednesday trading

  • AMC Entertainment climbs 7.1%
  • GameStop rises 8.7%
  • BlackBerry gains 5.2%
  • Koss Corp. rises about 2.9%
  • Naked Brand jumps 5.3%
  • Express gains 5.1%
  • Opendoor Technologies gains 4.9%
  • Lucid Group rises 4%
  • Newegg Commerce rallies 3.5%

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