What happened

Bed Bath & Beyond (BBBY) stock rallied this week, rising 30% through Thursday trading compared to a 1.5% increase in the wider market, according to data provided by S&P Global Market Intelligence.

That jump didn't make investors in the struggling retailer whole again. In fact, shares are still down nearly 30% since the start of 2022. But the meme stock continues to see extreme volatility, which this week produced market-trouncing short-term returns.

So what

Bed Bath & Beyond didn't announce any news that might have sent the stock higher. In fact, its last operating update contained plenty of negative signs about the business. Sales dropped by more than 20% in the selling period that ended in late May, helping precipitate a sharp drop in profitability.

Bed Bath & Beyond reported an operating loss of $339 million compared to a loss of $72 million a year ago. "The simple reality," interim CEO Sue Gove said in a press release, "is that our first quarter's results are not up to our expectations."

Yet investors chose to send shares higher this week, mainly as interest flooded back to several meme stocks. Bed Bath & Beyond has joined peers like AMC Entertainment Holdings in experiencing large price swings, this week in the positive direction.

Now what

Investors should not let that bounce sway them into believing the retailer's business is on the cusp of a big rebound. Bed Bath & Beyond is seeing far weaker customer traffic in recent months, a problem that has been compounded by quick changes in consumer shopping preferences. These market share losses are coming at a difficult time, just as inventory levels have been rising heading into the peak holiday shopping sales period.

Management is doing its best to use promotions to get inventory back in good shape, but shareholders are still likely to see more losses and write-down charges associated with Bed Bath & Beyond's shrinking sales trends over the next several quarters.

While volatility might produce additional stock price spikes similar to what investors saw this week, sharp declines are just as likely. The safer option is to pick successful retailers and hold those stocks over the long term.