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Bed Bath & Beyond Stock Soars In Renewed Meme Rally, Cohen Options Bets

Renewed options bets from a key shareholder look to have powered a Reddit-fueled rally in Bed, Bath & Beyond shares that has added more than $1 billion to the group's market value over the past month.

Updated at 9:49 am EST

Bed, Bath & Beyond  (BBBY)  shares powered higher again Wednesday as the meme stock favorite extended gains following a bullish options bet from GameStop  (GME)  chairman Ryan Cohen.

Cohen, who built a position in the home goods retailer last year and has pushed for significant changes, including the sale of its buybuy Baby division, purchased call options through his RC Ventures investment group that expire in January of next year at a strike price of between $60 and $80 each, according to Securities and Exchange Commission filings.

A call option gives the buyer the right, but not the obligation, to purchase shares at a certain price in the future.

Bed, Bath & Beyond shares have risen more than 350% over the past three weeks, on notably heavy trading volume, amid a surge in interest in the stock that could also be linked to a so-called 'short squeeze' that seeks to punish investors betting against a particular stock.

Recent data from S3 Partners suggests short interest comprises around 34% of the outstanding shares of Bed, Bath & Beyond, with bet against the retailer totaling $317 million.

Data from the website, which tracks real-time mentions on stocks within Reddit's r/wallstreetbets chatroom, indicated that Bed, Bath & Beyond is now the most-discussed stock among users, with activity up 65% from yesterday to around 19,000 individual posts.

Bed, Bath & Beyond shares were marked 26.4% higher in early Wednesday trading to change hands at $24.40 each.

Bed Bath & Beyond posted an adjusted loss for the three months ending on May 28, the group's fiscal first quarter, of $4.49 per share on revenues of just $1.46 billion and a 27% slump in comparable sales.

Bed Bath & Beyond said it would accelerate markdowns of its existing inventories "in order to right-size inventory levels commensurate with the declining sales trends."

The group aslo announced the exit of CEO Mark Tritton amid push from several activist investors -- including Cohen -- to explore the sale or listing of buybuy Baby.

Tritton had called the division an "important cornerstone" of the group's turnaround plans, and said he had hoped to increase BABY sales to more than $1.5 billion over the next three years, thanks in part to November 2021 marketing deal with Kroger Co (KR) .

Incoming CEO Sue Gove said the group suffered "an acute shift in customer sentiment" that has "materially escalated" into the summer months.

"This includes steep inflation and fluctuations in purchasing patterns, leading to significant dislocation in our sales and inventory that we will be working to actively resolve," she said. "The simple reality though is that our first quarter's results are not up to our expectations, nor are they reflective of the Company's true potential."