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Bed Bath & Beyond Stock Soars on Suspected Investor Short Squeeze

Bed Bath & Beyond shares soar, climbing 25%, after a flurry of announcements ignites a suspected short-squeeze on the stock.

Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report shares soared on Wednesday, gained more than 25%, after the retailer made a flurry of announcements including the launch of a digital marketplace that will sell goods from third-parties, igniting a suspected short-squeeze on the stock.

At last check, Bed Bath & Beyond shares were up 25.79% at $21.07 after the company made the digital marketplace announcement launch and also revealed a partnership with grocery chain Kroger  (KR) - Get Kroger Co. Report. The company also said its stock buyback program was ahead of schedule.

Even so, analysts speculated that the sharp spike after the market’s close that extended into Wednesday premarket trading was likely being fueled by a so-called short squeeze, in which hedge funds and other investors that had bet the stock would continue to fall in value were forced to buy back their shares when they went in the opposite direction to cut their losses.

Indeed, mentions of Bed Bath & Beyond on Reddit surged after the closing bell, according to sentiment tracker Swaggy Stocks. Bed Bath & Beyond was a meme crowd favorite earlier this year, joining meme mascots GameStop  (GME) - Get GameStop Corp. Class A Report and AMC Entertainment  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report before losing steam.

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Bed Bath & Beyond was among the most heavily shorted stocks among the 1,500 largest U.S. stocks, with 27% of its shares available for trading sold short, according to FactSet.

Trading shares of Bed Bath & Beyond is not for the faint-hearted, but investors could see some gains, Stephen “Sarge” Guilfoyle wrote in a recent Real Money Pro column

“I am not investing in BBBY, but I leave open the possibility," Guilfoyle wrote. "I am here solely with a mercenary heart to take away from the algo crowd who don't even know I lurk in their shadows. Ooh-freakin-Rah. Humans rule.”

Guilfoyle’s strategy is to wait for BBBY to reach $18 a share and then he plans to sell.

“I see $18 and I am outta here," he said.