Bed Bath & Beyond (NASDAQ:BBBY) shares are on the move on Monday, climbing as much as 58% higher before falling back significantly. There is some company-specific news and an analyst price target raise, but the move appears at least partially tied to ticker confusion on what is a very chaotic day on Wall Street.
Bed Bath & Beyond came into 2021 as an intriguing idea for a retail turnaround investment, the stock having nearly doubled in the second half of 2020 as the home goods retailer shed some underperforming businesses and streamlined operations.
But none of that work could have prepared investors for what has happened in recent days. The stock has more than doubled in 2021, and for a moment in the last five days was up more than 75%. The reason appears to be tied to WallStreetBets, a Reddit discussion community that is also credited with giving a boost to GameStop (NYSE:GME) and a number of other stocks.
Bed Bath & Beyond fits the profile of a stock that would attract WallStreetBets' attention because it has a substantial short interest, or investors betting against the stock. Therefore, a sudden move higher could cause a short squeeze that makes the stock surge.
Analysts at Loop Capital on Monday did raise their price target for Bed Bath & Beyond shares to $30, from $18, keeping a hold rating on the shares. The stock's surge on Monday easily surpasses that target.
Bed Bath & Beyond shares might also have been a mistaken beneficiary of the subreddit's interest in shares of BlackBerry (NYSE:BB), a stock that is also moving higher on Monday. Bed Bath & Beyond's BBBY ticker could be confused for BlackBerry's.
As retail turnaround stories go, Bed Bath & Beyond remains a company worth watching. But there is no way the business fundamentals can justify this move.
Those who bought in six months ago in hopes of a rebound can't be blamed for selling into this rally and booking a profit, and anyone excited about the business case for Bed Bath & Beyond would be well served waiting on the sidelines until we have a clearer picture of how this volatile period will play out.