What happened

Shares of housewares chain Bed Bath & Beyond (NASDAQ:BBBY) rose a dramatic 31% at the open on Wednesday (although the gain was pared back soon after). The news that got investors excited was the company's fiscal first-quarter 2021 earnings report, which it released before the open today.

So what

Bed Bath & Beyond's fiscal first-quarter sales increased 49% year over year. And looking at what the company considers its core brands (Bed Bath & Beyond, buybuy BABY, Harmon Face Values, and Decorist), sales were up a hefty 73%. The comparative quarter in 2020 was affected by the pandemic, but the year-over-year performance suggests strongly that Bed Bath & Beyond is getting back on track.

On the bottom line, the retailer posted adjusted earnings of $0.05 per share compared to a loss of $1.96 per share in the same quarter of 2021. The company beat Wall Street expectations on the top line, but fell short on the bottom.

A woman comparing pans in a store.

Image source: Getty Images.

Although that's a bit of a mixed outcome relative to consensus estimates, it would be difficult to suggest that the quarter was a bad one. In fact, based on the strong quarter, Bed Bath & Beyond increased its full-year 2021 outlook, upping its sales guidance from a range of $8 billion to $8.2 billion, to a range of $8.2 billion to $8.4 billion. It also boosted its adjusted EBITDA projections from a range of $500 million to $525 billion, to a range of $520 million to $540 million. Adjusted earnings are expected to fall between $1.40 and $1.55 per share. With that upbeat outlook, it's not surprising that investors were in a good mood.

Now what

The problem with all of this is that Bed Bath & Beyond has become caught up in the Reddit board craziness. So price moves here are often tied more to emotion than actual fundamentals. For example, the stock is up over 90% so far this year, but that includes two wild peaks that took the shares up as much as 180% only to see them quickly fall back.

So while today's earnings release was good news and likely precipitated the big gains, investors shouldn't get too excited here -- a lot of good news has already been priced in and irrational investors appear to be driving the stock price. In fact, by 11 a.m. EDT today, the stock's gain had been pared to just 11% or so.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.