Bed Bath & Beyond share surge reignites interest in GameStop, AMC (updated)

Value Exchange International

03/11/2021 14:53

(Updates prices)
    By Medha Singh
    Nov 3 (Reuters) - Shares of Bed Bath & Beyond Inc  BBBY.O 
jumped 15.22% on Wednesday as news of an accelerated share
buyback plan and tie-up with Kroger Co  KR.N  reignited the
interest of retail investors in the heavily shorted stock.
    The home products maker was tethered to the meme stocks
phenomenon this year, where individual investors coordinated in
online message boards like Reddit and Stocktwits to fuel
eye-popping rallies in certain shares, costing short sellers
billions of dollars.
    About 29% of Bed Bath & Beyond free float is shorted,
according to financial analytics firm Ortex. The surge in the
company's shares amid high short interest makes it ripe for a
"squeeze" where investors betting against the company are forced
to unwind their exposure to stem losses.
    Analysts at BofA Securities said while Bed Bath & Beyond's
announcements were enough to squeeze short sellers, the company
still faces risks in the coming months, including cost inflation
pinching its margins.
    Shares of the company closed at $19.30 after rising to
$25.72 earlier in the session.
    Other retail darlings GameStop Corp  GME.N  and AMC
Entertainment Holdings Inc  AMC.N  added 5.48% and 5.15%,
respectively, while Koss Corp  KOSS.O  and BlackBerry  BB.N 
were up 2.49% and 2.89%, respectively.
    Another highly shorted stock, Avis Budget Group Inc  CAR.O ,
slid 16.54% on Wednesday, a day after its shares doubled in
value on strong results.
    AMC, Workhorse Group Inc  WKHS.O , Bed Bath & Beyond and
Avis were among the most touted stocks on Stocktwits.
    After a subdued October, the appetite of retail investors
appears to be rising with most of their interest concentrated in
technology stocks, analysts at Vanda Research said in a weekly
note on Wednesday.
    Bed Bath & Beyond on Tuesday announced it would speed up its
$1 billion share buyback program, saying it would complete it by
the end of 2021, two years ahead of schedule. The company also
said it was partnering with Kroger to bring its line of home and
baby products to the grocer's website.
    "The announcements should be received positively by
investors, especially the share buyback, which we estimate has
the potential to reduce the share count by 15% and boost 2022
EPS," Telsey Advisory Group analysts said in a client note.

 (Reporting by Medha Singh and Uday Sampath in Bengaluru
Additional reporting by Ira Iosebashvili in New York
Editing by Bernard Orr, Shailesh Kuber and Matthew Lewis)
 ((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780,
outside U.S. +91 80 6182 2802; Twitter: https://twitter.com/medhasinghs;))