Bed Bath & Beyond spikes 30% despite bankruptcy fears as Reddit crowd hopes for an M&A miracle
- Bed Bath & Beyond stock jumped 30% Monday after last week's heavy losses.
- The home furnishings retailer reported a bleak financial outlook and potential bankruptcy on Thursday.
Shares of Bed Bath & Beyond soared 30% Monday amid speculation among Reddit users about a potential merger and acquisition deal.
The rally comes after last week's steep losses when the retailer warned quarterly sales were poor and that bankruptcy was one option on the table. Inventory snags and credit limits have weighed down the firm's performance.
But in one post from Thursday that received 1,400 upvotes and nearly 500 comments, Redditor Dan23DJR posited that a merger agreement was "100% DEFINITELY happening."
The post cited an NT 10-Q form explaining why Bed Bath & Beyond may file earnings late as well as two December S-4 filings as fuel for the acquisition theory.
Reactions were largely positive to the Reddit explanation, as other users cheered the line of reasoning, with some calling for buying more shares and holding on to the meme stock.
During the meme-stock craze of early 2021, short interest was extremely high in the home-goods company, so alongside GameStop, it dominated conversations on Reddit's WallStreetBets page during much of the last two years.
Shares soared as high as $54 in January 2021. They have since tumbled to about $1.70. Still, the stock has remained popular in some corners.
In August, one college student capitalized on a brief rally by netting a $110 million profit. The volume of trading that month was abnormally high, according to FactSet data, after trading was relatively muted in the months leading up to the surge.
However, shares tumbled 40% on August 18 when activist investor and GameStop exec Ryan Cohen sold his entire Bed Bath & Beyond stake — 9.45 million shares — via his firm RC Ventures.
Bed Bath & Beyond is scheduled to report earnings on Tuesday, following warnings that losses could be as steep as 40%, or about $385.8 million.