Bed Bath & Beyond shares surge 35% with meme traders rallying behind the struggling big box store

Bed Bath & Beyond shares surged by more than a third on Wednesday after meme traders rallied behind the struggling big box store as it prepares for bankruptcy.

The velocity of shares traded in Bed Bath & Beyond has rocketed since Monday when more than 336million were bought and sold. On Tuesday, 300million shares were traded and on Wednesday the volume hit a staggering 939million. To put that in context, its average daily volume over the last 65 days is 99million. 

Its price hit 55 cents Wednesday and has surged by double digits over the last three days after closing at 24 cents last Friday. The increase comes despite reports this week that it will file for bankruptcy within the coming days after a post-pandemic retail apocalypse swept the nation. 

The number of messages mentioning the flailing company was 'extremely high' and overall sentiment ranked 'extremely bullish' over the last 24 hours on StockTwits, a social media platform for retail investors.

'Bullish Maximus!' said one user mentioning the retailor alongside a rocket emoji.

The price hit 55 cents Wednesday, more than double the 24 cents its price hit at close Friday. It saw a slump on Thursday morning, perhaps indicating the three-day rally was cooling off

A Bed Bath and Beyond store in Clifton, New Jersey, in February. While it once owned more than 1,500 locations across the country, it previously announced plans to end the year with just 480

A bullish investor posting Thursday morning about his sentiments on Bed Bath and Beyond using its ticker BBBY on social media site Stocktwits

Meme investors pile in when there is social media hype, often around a failing company where they can operate collectively to trigger short squeezes - forcing those who are betting against the stock to bail out of their positions.

Almost a fifth of Bed Bath & Beyond shares have been shorted by institutional traders. By comparison, less than one percent of Apple's shares are shorted.

In pre-market Thursday the stock was down 20 percent, indicating that this week's surge could have been more of a pump-and-dump than a short squeeze.

Tommy Tranfo, head of community at Stocktwits, speculated that bullish traders might see bankruptcy as the company's best chance of surviving, while bearish investors will also play a role in pushing the price up.

'Filing for bankruptcy often sparks a short covering rally, as bearish investors don't want to risk their profits in an attempt to squeeze the last bit of juice out of the stock,' Tranfo told Barrons. 

Once the go-to retailor for wedding presents, Bed Bath & Beyond recently said it would need to find $300million in share sales by April 26 to avoid chapter 11 bankruptcy, also known as 'reorganization' bankruptcy.

But as of April 10, the company had reportedly raised just $48.5 million from stock sales. With 178 million shares still available at the time, and a Wednesday stock valuation of just 46 cents at closing, selling the remainder of its shares would fail to net the retailer more than $80 million. 

Over the last few months, several thousand users on wedding services platform Zola have axed Bed Bath & Beyond products from their wish lists.

The number of Zola registries with the retailer is down by more than half compared to last year, according to Bloomberg. 

A store manager in New Jersey told Insider that at its peak around 10 to 12 couples would set up their wedding registries in his store each week, each with a total spend of around $7,500. 

Amazon leap-frogged the firm in the wedding registry market in 2021, claiming almost half of the share, according to analysis by investment bank Baird. 

The retailer's collapse could be finalized as soon as this weekend, according to the Wall Street Journal. The company also cautioned that its bankruptcy would mean it will be forced to liquidate its assets.

The number of messages mentioning the flailing company was 'extremely high' and overall sentiment ranked 'extremely bullish' over the last 24 hours on StockTwits, a social media platform for retail investors

The business once thrived in the pandemic and commanded 1,500 stores across the US, before being hit with a tumultuous few years 

Following several catastrophic years plagued with supply chain disruptions and the tragic suicide of its CFO, the retail behemoth is set for bankruptcy despite already announcing a slate of store closures and staff layoffs.

The once-powerful business has been one of the hardest hit since the pandemic, with early-year reports showing a 40 percent to 50 percent decline of in-store sales for the financial quarter ending in February. 

Its collapse came after a period of relative success, where the Covid-19 pandemic saw homeowners trapped inside, causing a surge in demand for Bed Bath & Beyond stock. 

The company attempted to roll out a series of new products to capitalize on the new demand in 2021. But when the retail industry was subsequently hit with supply chain problems, the company's bold plan suffered. 

Bed Bath & Beyond would lose millions in its unsold stockpile, setting up a lengthy spell of decline that has resulted in reports of an imminent bankruptcy. 

As it faced a poor financial outlook, the business kicked off 2022 with a devastating earnings report that showed its net sales fell 28%, while its net losses ballooned by over $75 million. 

By April, the company reported it was running at a net loss of $159 million, compared to a $9 million profit the year before, according to Retail Dive. 

With the company's finances spiraling, its CFO Gustavo Arnal, 52, jumped from his 18th floor apartment to his death in Manhattan in September. 

His suicide came days after the embattled retailer announced it was shuttering stores and laying off workers, alongside news that Arnal - as well as the company - were being sued over accusations it artificially inflated the firm's stock price in a pump-and-dump scheme. 

Faced with a dire financial outlook, the retail giant has also identified at least 416 US stores and 46 Canadian stores for closure by the end of 2023. While it once owned more than 1,500 locations across the country, it previously announced plans to end the year with just 480. 

Bed Bath & Beyond CFO Gustavo Arnal, 52, committed suicide in September 2022

Arnal, right, jumped to his death from the 18th floor of Manhattan's 'Jenga' tower - two days after the firm announced plans to lay off thousands of staff and close 150 stores

Amid reports that the business has gone belly up, Bed Bath & Beyond also faces another looming financial deadline. 

Lenders Sixth Street Partners and JP Morgan Chase & Co. are reportedly requiring the retailer to raise $232 million by June 27.  

Last month, the struggling business also ended a financial deal with hedge fund manager Hudson Bay Capital Management, which would have seen the homeware company supplied with up to $1 billion to fund a revival. 

Bed Bath & Beyond is not the only major US store to hit hard times, however, with many iconic brands also announcing a swathe of store closures. 

Nearly 850 big box stores are set to be shuttered by the end of 2023 as retailers are being forced into desperate cost-cutting measures. 

Among the prominent stores to close down locations across the US includes Walmart, Amazon, CVS, Foot Locker and Macy's. 

DailyMail.com has contacted Bed Bath & Beyond for comment.