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Bed Bath & Beyond stock soars amid meme stock rally

Yahoo Finance's Ines Ferré discusses the move higher in meme stocks like Bed Bath & Beyond on Wednesday as short interest rises.

Video Transcript

RACHELLE AKUFFO: All right, well, let's pivot now to the market action where the meme trade is gaining some steam. Here to break down all the action is Yahoo Finance's Ines Ferre. And there's a lot of movement this morning.

INES FERRE: Oh yeah, tons of movement, especially with BBBY, Bed Bath & Beyond. I'm going to pull that up on our interactive board right here so you can see-- it's up more than 40%. It's actually up for the last three days. Right here, you can see Bed Bath & Beyond on the upper left corner, up 48%. Over the last three days, it's up 135%.

A lot of speculation with this retailer. Last week, Bed Bath & Beyond lost almost half of its value. It's been in trouble. It reported a bad quarter, a bigger loss than expected. It's exploring strategic options, including, perhaps, bankruptcy. It started another round of layoffs.

So a lot of speculation with this stock that has been traditionally considered one of the meme stocks. I mean, you've got AMC and GME that are the flagship meme stocks, but Bed Bath & Beyond, certainly, throughout all of last year, has been a popular meme stock. There also could be speculation that the stock price is so low that, perhaps, it could be a target for acquisition. So that also helps to send the stock higher.

Do want to point out on our trending ticker page, we have had Party City as the number one trending ticker. Shares yesterday skyrocketed in pre-market. Those shares were up 50%. But take a look-- now, it's down 4%, quite a lot of volatility of what we've seen today with this company. It's in talks for a potential bankruptcy loan.

Now, keep in mind-- just because a company, if it does go into bankruptcy, doesn't mean that necessarily it is the end of the company. Remember that Hertz went into chapter 11 back in 2020 and it emerged from chapter 11 as a stronger company. But what it does do initially to the stock price is it brings it down. So, certainly, Rachelle, a lot of speculation is what we're seeing with these meme stocks.

RACHELLE AKUFFO: And, of course, not a rosy picture at all for bears and short trades on the markets right now. What can you tell us there?

INES FERRE: Yeah, look, a part of what you're seeing is also a short covering. So you have-- I'm going to pull up BBBY right now, short interest is incredibly high on this stock. It's 48% of the float. So that means that you've got the number of shares that have been sold short-- that short interest is incredibly high. GME and AMC is 21% of the float.

And just for comparison, usually US stocks have about 5% of the float that has short interest-- so incredibly high short interest on these stocks. And when you get these types of rallies, you have short coverings that only exacerbates the move to the upside.

So part of what we're seeing with these stock movements is short covering. And with Party City, in fact, I was looking at a Reddit board from five months ago-- these Redditors were predicting that Party City would be the next big squeeze. So certainly, that's what they're watching out for right now.

RACHELLE AKUFFO: See, we thought the Reddit crew was behind us, but here they are in full force. A big thank you there, Ines Ferre.