FARM FRENZY SAGA DRIVER

Video game retailer GameStop shuttered hundreds of store locations even before the pandemic due to growing margin pressure from large e-Commerce retailers like Amazon ( AMZN) and changing consumer behavior.

Bed Bath & Beyond: A struggling businessĪ key feature of a meme stock is that the business is struggling. Since the beginning of August, shares of BBBY have surged 750% and investors should think about taking profits here.

FARM FRENZY SAGA DRIVER

The disclosure of the option purchase has been the key driver behind BBBY’s soaring stock price yesterday, in large part because Cohen also played a key role during last year’s unfolding GameStop saga. The company bought 1.67M call options on BBBY with an expiration date of January 2023.

Yesterday’s surge in pricing was chiefly related to a disclosure made by Bed Bath & Beyond and RC Ventures LLC, a venture capital firm owned by GameStop Corp.’s chairman Ryan Cohen who is a large investor in the home decor retail chain. Since Bed Bath & Beyond is one of the most shorted stocks in the market with a short interest ratio of 47%, the retail chain is a natural target for WallStreetBets’ audience. GameStop ( GME) was the original meme stock, and Reddit-minded investors had some success in creating circumstances for a short squeeze. The idea is to aggressively buy up heavily shorted stocks in an attempt to ignite a short squeeze. WallStreetBets is an investment forum on Reddit where mostly younger people trade stock tips and egg each other on to buy a stock, sometimes in a bid to take on large hedge funds which have taken short position in struggling companies.

I expect the bubble to burst since the retailer’s fundamentals remain challenged and there is no objective justification for Bed Bath & Beyond’s 258% return this month.īBBY data by YCharts Meme traders target their next short squeeze company: BBBY With panic buying still driving the retailer’s shares 29% higher by the end of the day, investors are possibly well advised to sell into the current sentiment and count their blessings they can secure a big profit. Bed Bath & Beyond Inc.'s ( NASDAQ: BBBY) shares soared 70% yesterday after a major venture capital firm disclosed the purchase of call options on the retail chain.

Farm frenzy saga