Bed Bath & Beyond joins meme stock crowd — jumping 50 percent this week

Bed Bath & Beyond shares jumped by nearly 30 percent early Wednesday after the retailer said Kroger would stock some of its most popular home and baby items at grocery stores across the country.

It was music to the ears for the crowd of people on Reddit stock boards who have targeted beaten-down Bed Bath & Beyond as one of the next so-called “meme stock” favorites, joining AMC Theatres and GameStop as the latest hot ticket for retail traders.

If Bed Bath & Beyond takes the same path as those two meme stock darlings, the home retailer could soon find itself with massive gains: Over the past year, GameStop’s stock has jumped more than 1,900 percent; AMC’s, nearly 1,700 percent.

Even after Wednesday’s jump, Bed Bath & Beyond stock still is down about 1.6 percent over the past year — but over the past five days, it’s up nearly 50 percent.

Part of the meme stock phenomenon comes when stocks that were left for dead are embraced by retail investors on Internet chat boards: They pile into shares that oftentimes have large “short” positions — or shares, in other words, that have attracted big bets that they’ll fall.

When the stocks don’t fall, the investors who have bet against the stock are forced to sell, forcing the shares even higher — what’s known as a “short squeeze.”

Market watchers said that could be what’s happening with Bed Bath & Beyond.

The heavily shorted stock, which is popular with so-called meme investors, rose as much as 106 percent on Tuesday before paring some of its gains.

The impetus for the most recent jump was the company’s announcement on Tuesday that it will sell home and baby merchandise — it owns BuyBuy Baby — with Kroger via a digital tie-up and a pilot involving select Kroger stores starting in 2022.

The partnership with the country’s largest grocery chain was part of a slew of Bed Bath & Beyond announcements Tuesday: The company also said it would complete a $1 billion share buyback two years ahead of schedule and the launch of a “digital marketplace.”

The partnership coincides with Union, NJ-based Bed Bath & Beyond’s launch of a new digital marketplace, the company said.

“We are developing new avenues of long-term profitable growth to allow us to organically build on our existing authority in the Home and Baby categories,” Chief Executive Mark Triton said in a statement. “We will continue to leverage our market position to drive both customer acquisition and retention.”

The digital marketplace will stock a selection of “curated” items from third parties. Those items will be “seamlessly integrated” onto Bed and Bath’s website, according to a company statement.

Bed and Bath joins Walmart, Target and other retailers in embracing a model where the stores don’t just sell their own items on their websites, but open up their sites to items from other sellers — following an Amazon model.

Triton, who has been the retailer’s CEO since December 2019, also announced leadership changes within the executive team.

In 2019, a group of activist investors demanded an overhaul of the management team, which eventually resulted in Triton’s hiring.

Despite the recent embrace of its stock, over the past five years, Bed Bath & Beyond has fallen by nearly 50 percent as bricks-and-mortar retail stocks face heavy pressure in an online world. That compares the broader market, which has gained more than 121 percent over the same time frame.

Bed and Bath joined the broader market Tuesday in a big rally, with all three main indexes setting records: The Dow Jones Industrial Average closed above 36,000 for the first time.