Bed Bath & Beyond: day traders seek new meme themes
A few weeks ago, the meme stock trading craze that turbocharged the price of shares such as GameStop had run out of steam. But thrill-seeking Reddit day traders remain a force. For proof, look no further than the stock price surges in both struggling home goods retailer Bed Bath & Beyond and car rental company Avis Budget.
Avis more than tripled in value at one point on Tuesday. Bath & Beyond jumped as much as 55 per cent on Wednesday as the most actively traded stock on the S&P 500, before slipping back on Thursday.
Positive corporate announcements provided the trigger for the stock price moves. Avis released better than expected earnings and Bed Bath & Beyond announced a partnership with groceries chain Kroger. Even so, the moves are disproportionate to any improvements in fundamentals.
Only a month ago Bed Bath & Beyond warned that supply chain issues would hit sales and that cost inflation would eat into profits. These challenges remain. At 23 times 2021 earnings, the company trades at a premium to Target.
The price rally points to a persistence of the meme stock trend, but in a more muted form. Workers are back in the office. Bars, restaurants, cinemas and sports venues have reopened. Even Dave Portnoy, the sports blogger-turned-day trader, has resumed tweeting about football and pizzas instead of stock tips.
No surprise that Robinhood reported a sharp drop-off in trading activity between the second and third quarter. But many newly minted day traders still look for excitement in volatile shares. According to BrokerChooser, 30m new brokerage accounts were opened in the US in the first 12 months of the pandemic.
Trading platforms such as Robinhood have enabled users to trade with a few taps on their phone, often at no cost. The speculative trading urge will not go away quickly when money is so cheap to borrow and stock trading is easy as ordering a book on Amazon.
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