NASDAQ Adv: 2.078 Dec: 2.497 NYSE Adv: 2.256 Dec: 1.852 (Source: Nasdaq)
Shares of Bed Bath & Beyond Inc (BBBY.O) rose 60% on Tuesday to a nearly five-month high in volatile trading, as retail investors flocked to the stock after a filing broke activist investor Ryan Cohen’s latest bet on the retailer of household items revealed. .
The stock rose a whopping 78.8% to $28.60 during the session and trading was halted several times due to volatility.
Cohen’s investment vehicle RC Ventures, the second largest investor in the company and has added three independent directors to its board of directors, purchased call options expiring in January 2023 on 1.67 million shares with strike prices ranging from $60 to $ 80.
An option gives the buyer the right to buy or sell a security at a specified price on a specified date. Buying a call option is essentially betting that the underlying asset will rise in price.
“You see his name (Cohen) get associated and it gets the buzz going. So right now the social media buzz is circulating around Bed Bath and Beyond and it’s spreading to other stocks as well,” said Dennis Dick, Retailer at Triple D Trading.
The home furnishing company’s shares were most frequently traded on the brokerage Fidelity platform, signaling interest from retail investors.
About 300 million shares switched hands at 2:30 p.m. ET, much higher than the 30-day moving average volume of nearly 29 million.
Trading in Bed Bath & Beyond, which has 50.7% of its public free float in short position, has triggered a short squeeze signal, according to analytics firm Ortex.
The stock is up 440% so far this month in a rally reminiscent of eye-watering gains in the stocks of GameStop (GME.N) and AMC Entertainment (AMC.N) early last year, which hurt hedge funds that had bet against the stock.
Other stocks sharply shorted, meal delivery company Blue Apron (APRN.N), sports TV streaming company FuboTV (FUBO.N), GameStop and barbecue grill maker Weber Inc (WEBR.N) rose between 8% and 53%.
Bed Bath & Beyond opened lower Tuesday after B. Riley lowered its stock to “sell,” saying the stock was trading at “unrealistic valuations.”
Source: Reuters (reported by Medha Singh, Bansari Mayur Kamdar and Sruthi Shankar in Bengaluru; editing by Maju Samuel and Shinjini Ganguli)