The BBB Meme Traders Are at It Again

Which of these things doesn’t belong?

  1. Bed Bath & Beyond stock has doubled in price this week.
  2. Trading in BBB stock is through the roof with volume more than equaling the number of outstanding shares.
  3. Reports are circulating that the company is in serious preparations to file for bankruptcy in the very near future.

The correct answer is all of the above. They are all happening simultaneously.

Even as the Bloomberg Law news service reports the beleaguered retailer is meeting with advisors and lenders “ahead of a bankruptcy filing that could come in the next few weeks,” BBB’s stock continued to explode this week, rising to more than 54 cents a share in trading Wednesday. That would put it at more than double its low from just this past Friday, continuing an unpredictable upsurge that seems to defy logic.

Of course, logic is not something that is often the case when it comes to this stock which continues to be a meme-stock-trader favorite based on online speculation that it will be bought or otherwise escape bankruptcy through financial divine intervention.

Likewise, BBB bankruptcy talk has been rampant for months as the retailer’s financial position spiraled ever downward…only to be resuscitated at the last minute by yet another funding scheme, many of which appear to be nearly unprecedented. All the while Bed Bath’s actual business of selling home furnishings products continues to be downright dismal with out-of-stock positions inflamed by suppliers refusing to ship it and shoppers abandoning the place in droves according to the retailer’s own sales estimates.

The recent spike in the BBB share price seems to be speculators once again spending too much time on social media. “With bankruptcy looming, the fundamentals of the company are not attractive to new investors,” senior market analyst Daniela Hathorn told the online news source Market Watch. “Renewed social media attention is causing a false sense of demand.

“As usual with meme stocks, the bullish run may last a few days as it overheats, but it is unlikely to sustain any move higher and when momentum runs out of steam, the stock will come crashing back down again.”

That process may have already started by Wednesday early afternoon. After peaking earlier in the day at nearly 55 cents a share, it was starting to drop and had fallen to about 44 cents a share by around 1pm. Still, this represented a massive increase over where the stock started the week, at around 26 cents a share.

All of this came on enormous levels of trading, more than 600 million shares just today by early afternoon. Last week, in an SEC filing the company said it had about 400 million shares outstanding in total although it was continuing to issue additional shares as part of its fund-raising efforts.

BBB continues to say it remains “steadfast” in its turnaround efforts to stay out of Chapter 11 and has not commented about this week’s stock surge.

However the rest of the day goes for the company – much less the rest of the week – one can be almost guaranteed it will continue to surprise and probably shock just about all interested parties. Say what you want about the retailer’s lackluster stores right now, but there is no shortage of excitement when it comes to BBB’s stock.

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