But what is still important to note is how bizarre this market behavior is, and how it upends conventional ideas of the way the stock market is supposed to work. It’s virtually identical to what happened to GameStop and AMC and, indeed, BBBY itself earlier. And lots of the retail investors who bought on the way up have lost a ton of money. BBBY is now trading below $10 a share, down about 66 percent from this year’s high. That broke the fever and sent the stock tumbling. Justin Speak: What GameStop has to do with the parable of the rich fool The next day brought news of another filing, which showed that Cohen had sold all his shares. Last Wednesday, news broke that Cohen had filed papers with the SEC saying that he planned to divest himself of his entire stake in the company. However it may have started, the strategy of piling into BBBY worked great for meme-stock investors. But Cohen revealed that stake in March, so this can’t explain why the stock took off in August. Many news stories on the subject mention that a big investor named Ryan Cohen, who had been a key player in GameStop’s rise, had taken a big stake in Bed Bath & Beyond and was agitating for changes. What’s mysterious, though, is what got the ball rolling in the first place. All through this, retail traders were talking to one another about why it made sense to buy BBBY, and exhorting one another to hold the stock and not sell it, to have, in Reddit-trader parlance, “diamond hands.” That made the stock price rise more, which encouraged yet more retail investors to pile in, which drove up the price, and so on. Bed Bath & Beyond is also one of the most heavily shorted stocks on Wall Street, so as the stock rose, some short sellers repurchased shares to cover their bets. That got more retail investors to buy, driving the price up further. What happened to drive the stock up? Traders on the Reddit message board r/wallstreetbets started to talk about the stock more in early August, and the share price began to rise day after day. James Surowiecki: How crypto disappeared into thin air Just last week the company hired a restructuring specialist, which suggests that bankruptcy may be in its future. In fact, all the news about the business has been terrible. This wasn’t because investors got good news about the company’s business. By mid-August, it was heading toward $30 a share. But then, as the overall market perked up in July, the interest in meme stocks improbably returned-and for no company was that more true than Bed Bath & Beyond, which is also known on Wall Street by its Nasdaq abbreviation, BBBY.Īt the end of July, BBBY’s stock was trading at roughly $5 a share. (At its peak, GameStop had gone from little more than $1 to $80 a share.) The frenzy faded and, in the big market sell-off in 2022, interest in these companies waned. You probably remember meme-stock mania from early 2021, when hordes of retail investors-many of them communicating with one another via social media and Reddit message boards-bought up the stocks of struggling companies such as GameStop, AMC, and, yes, Bed Bath & Beyond, sending them soaring to unimaginable heights. And that strange divergence happened for just one reason: Meme-stock mania made a sudden and unexpected return. Bed Bath & Beyond is a struggling home-goods retailer whose underlying business is so bad that stories about the company carry headlines like “ Bed Bath & Beyond’s Big Dilemma: Can It Survive?” But for most of August, Bed Bath & Beyond was also one of the hottest stocks on Wall Street, rising almost 500 percent in a matter of weeks.
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