(Bloomberg) — Excitement that’s triggered a surge in Bed Bath & Beyond Inc. shares after a whirl of announcements has fueled a rally in other retail-trader favorites, causing chatrooms like StockTwits to light up with optimistic comments.
The retailer soared as much as 54% in Wednesday’s trading, the day after releasing plans to help its turnaround. The advance triggered gains in original meme stocks like AMC Entertainment Holdings Inc., GameStop Corp., and Koss Corp., which each rose more than 7%.
Bed Bath & Beyond was among the many so-called meme stocks that saw meteoric gains turn to pain earlier this year amid concern about the company’s fundamentals. Shares closed at their lowest level in more than a year last week amid muted expectations after quarterly sales missed estimates.
This week’s resurgence is likely fueled in part by FOMO — fear of missing out — and those who have bought into the investing mantra of YOLO — you only live once. The appetite for risky investments among retail traders appears to be rising, according to Vanda Research.
Bed Bath & Beyond rallied to $25.72, posting its biggest gain in five months, to lead a Bloomberg-tracked basket of meme stocks to the highest level since mid-July. The gains spread to AMC Entertainment and GameStop and the meme-stock index jumped 4.2% in the first 10 minutes of Wednesday’s session.
The red-hot rally comes just a day after Avis Budget Group Inc. more than doubled amid a flurry of retail-crazed trading. While investors cheered the surges, Wall Street analysts voiced warnings that the gains ignore reality.
Some Skeptics
Loop Capital Markets’ Anthony Chukumba downgraded Bed Bath & Beyond to sell, saying the purveyor of home goods has “lost market share, mind share, and consumer relevance” with none of the updates materially changing his skeptical view on the stock. Avis, which fell about 10% in early trading, was downgraded by both JPMorgan Chase & Co. and Deutsche Bank AG, who warned the company’s $20 billion valuation wasn’t realistic.
To be fair, Wall Street has warned that valuations for cult-favorites like AMC Entertainment and GameStop have been divorced from reality for more than nine months. But that hasn’t stopped retail traders and hedge funds looking to strike it rich quick.
For investors who got in before the start of 2021, it’s been lucrative. Movie-theater company AMC Entertainment is up nearly 1,900% and GameStop has soared more than 1,000%, while newer meme stocks like the Donald Trump-tied SPAC, Digital World Acquisition Corp., and Ocugen Inc. have returned more than 500% apiece.
A basket of 37 retail-trader favorites tracked by Bloomberg News has climbed 10% this week, besting a 0.4% return for the S&P 500 Index. The group of stocks preferred by day traders rallied 4.9% on Monday and is on pace for its best weekly performance since late August.
Here are some retail-favorites that are seeing notable gains in Wednesday trading
- AMC Entertainment climbs 8.6%
- GameStop rises 13%
- BlackBerry gains 5%
- Koss Corp. rises about 8.3%
- Naked Brand jumps 3.4%
- SoFi Technologies adds 1.5%
- Clover Health rises 2.6%
(Updates share movement throughout.)
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