Bed Bath & Beyond jumps 68% to lead last-gasp rally in meme stocks; AMC gets 21%

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A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York, on Friday, January 6, 2023.

Johnny Milano | Bloomberg | Getty Images

A group of speculative stocks rallied in double digits on Wednesday as retail investors pushed meme names up again in the new year after a dismal 2022.

Bed Bath & Beyond skyrocketed a whopping 68.6% to fuel the move on Wednesday. Sections of GameStopthe original star of the meme stock mania 2021, climbed more than 7% , while AMC Entertainment has grown by more than 21%.

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Meme stocks rally once again

Stock Short interest % float Dose. Advantage % off 52W high
Bed Bath & Beyond (BBBY) 48.9% 68% -88%
AMC 21% 21% -77%
GameStop (GME) 21% 7% -62%

Source: FactSet

What Bed Bath and Beyond's bankruptcy warning could mean for meme stocks

“We don’t like the strength in nonsense stocks like AMC, CVNA, GME, BBBY, PRTY, etc,” said Adam Crisafulli, founder of Vital Knowledge. “This just means people are running blind .”

In early 2021, a band of short-selling traders came together on social media to bid for several stocks that were in short supply, creating a massive short squeeze that caused great pain to short sellers. These meme stocks enjoyed big gains last year when risk sentiment shifted amid aggressive rate hikes. GameStop fell 50% in 2022, while AMC fell 75% and Bed Bath & Beyond fell 82%.

While short interest in these names has come down from its post-crash peak, it is still well above average.

About 48% of Bed Bath & Beyond’s float shares are sold short, compared to an average of 5% short interest in common U.S. stocks, according to S3 Partners. For GameStop, short interest is 21%, down from more than 100% at the height of the stock meme mania in 2021, according to FactSet. AMC has also short sold 21% of shares.

A short squeeze occurs when a stock jumps significantly higher, forcing short sellers to buy back shares to limit their losses. The short cover tends to give more fuel to the stock.

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