Bed Bath & Beyond (BBBY) defied market expectations after reporting a dreary fiscal 2021 Q3 earnings report by running to an early 10% gain in morning trading and then holding firm throughout the session.
In afternoon trading, the stock was still up 10% despite having badly missed Wall Street expectations and the company's own estimates due to supply chain disruptions and the impact of sharply higher inflation (it had been up as much as 23% in the morning session).
The home goods retailer fell well short of both sales and earnings forecasts, but some analysts attributed the rally to its status as one of the original meme stocks. Some 22% of Bed Bath & Beyond's outstanding shares are sold short, and Reddit traders have been rallying around the stock once more.
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Analysts aren't as enamored with the company, though. Barron's quotes Wells Fargo analyst Zachary Fadem as saying the elevated short interest and the retailer's planned $265 million share buyback program helped fuel the stock's rise, but he told investors in a research note the "fundamentals are deteriorating, [long-term] goals appear aggressive, and cash appears to be dwindling into a period of heightened business investment."
Bloomberg also endorsed the notion this was a Reddit rally for the retailer, pointing out that a basket of 37 meme stocks were up today, with notable names like AMC Entertainment and GameStop also climbing higher. Fidelity reported they were among the 10 most-bought stocks on its platform today.
While Bed Bath & Beyond's gains are welcome, it's hard to see them sticking. The home goods retailer said it may report a loss of as much as $0.15 per share for the full year, though it could also break even. Earlier this year, the company had predicted it would make a profit of $0.70 to $1.10 per share.
