Bed Bath & Beyond Shares Are Up 300% And Making Meme Stocks Great Again

To most Americans, Bed Bath & Beyond is the depressing shopping plaza staple that's been done dirty by Amazon. Over the past decade sales have plummeted, its share price has crumbled, and the only redeeming quality about Bed Bath is that it isn't Kohl's.

Of course, if you live in the land of make believe (read: the internet, and more specifically, Reddit's Wall Street Bets subreddit), Bed Bath & Beyond is the stuff that Lambos are made of. Shares of the retailer preferred by people who don't give a fuck about thread count jumped more than 70% at one point today and have mooned more than 300% in the past month.

Of course, this isn't Bed Bath's first rodeo. During meme stock madness back in January 2021 when GameStop and AMC were making headlines, Bed Bath & Beyond was also suckling from the teet of the American retail investor.

Fast-forward a year and a half and Bed Bath & Beyond (ticker symbol: BBBY) is the captain now. It's driving a resurgence in meme stock interest… and by that I mean there are a lot of rocket emojis next to its ticker symbol on internet forums.

So, what's got investors fully erect?

This man…

If Ryan looks familiar, that's because he was elevated to demigod status by smooth brains after taking a yuge stake in GameStop last year. He went on to become chairman (hence, the Tweet above), and promised to turn around the dumpster fire of a video game retailer. Of course, the founder of Chewy hasn't exactly delivered on his grand plans to turn GameStop into an Amazon competitor. He did, however, roll out a crypto/NFT wallet… that no one uses.

Wondering what this has to do with Bed Bath & Beyond?

Well, apparently Ry Guy has a soft spot for shitty retailers. Because earlier this year he also took a 10% stake in Bed Bath & Beyond. At the time, the move sent shares mooning.

Then today Ryan's RC Ventures dropped an SEC filing that got the people going. According to the filing, Ryan went full degen, buying options on more than 1.6M shares of BBBY. The strike price of those options is between $60 and $80 with an expiration of January 2023. To put things in perspective, even with the current climb, shares of Bed Bath are trading at just ~$25. This is what they call in the industry "wayyyyyy out of the money call options."

What does this all mean? (… asking for a friend)

The options contracts give Ryan the, well, option, to buy the underlying Bed Bath stock if it moves above the strike price (in this case, between $60 and $80) before the expiration date. Should BBBY move above the $60 threshold he pockets the difference between the current market price and the strike price (minus a premium/fee). 

The problem? The stock needs to go from ~$25 to at least $60 for him to make any money. Spoiler: in most circumstances this would be an incredibly reckless trade.

Still, investors appear to be following the "smart money" into the stock. It isn't uncommon for investors to make moves based on what insiders are doing, but the sheer volume in this case is pretty fucking unbelievable. 

So there has to be something else going on, right?

Yup. Ryan couldn't have timed his apeing more perfectly. His power move comes while $BBBY is balls deep in a short squeeze.

Friendly reminder: a short squeeze happens when a stock with significant short interest starts getting some momentum (for any reason, but in the case of meme stonks, it often starts on the interwebs). The shorts need to buy shares to close out their position and stop the bleeding. This buying, of course, sends shares higher…. which could force other shorts to begin covering their asses. One thing leads to another and yada, yada, yada crayon eaters on WallStreetBets are buying Lambos with straight cash home.

Large explained short squeezes in this week's episode The Family Office right around the 16:20 mark…

Everything has fallen into place…

BBBY's short interest has gone parabolic. According to the snitches over at FactSet, 46% of Bed Bath's outstanding shares were sold short last week. And mentions of Bed Bath & Beyond on WallStreetBets, StockTwits, and probably the PornHub comment section have soared, sending shares higher and applying more pressure to shorts. 

And now, Ryan Cohen is piling on.

Next stop: the moon.

Snap necks and cash checks,

Tyler (@JPMorinChase)

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And if the written word isn't your thing, Large and I host a weekly podcast called The Family Office. We chat markets and taking you along for the ride as we invest our own money. Watch on YouTube. Or listen on Spotify or Apple.