What’s Behind Bed Bath & Beyond’s Wild Wall Street Ride This Week

If the upper management of Bed Bath & Beyond BBBY has a huge headache from all the ups and downs the company has experienced this week, you really can’t blame them.

As the week finishes up, the big box home furnishings chain’s stock is back up again following an exuberant report from a research company projecting a significant upside potential for its share price, at least double its current price.

This follows an earlier spike due to suspected social media-driven short-covering activity and the subsequent fall-off as things calmed down, all coming in the midst of significant news developments coming out of the company that on their own could have driven the share price up.

Bed Bath, which is in the midst of a top-to-bottom overhaul led by CEO Mark Tritton and a totally new management team, started the week trading at $14.41 when the opening bell rang Monday morning. It crept up that day and into Tuesday but on Wednesday. Nov. 3, the stock exploded. At first it seemed to be driven by favorable news coming out of the company, led by its announcement that it was accelerating its stock buyback plan by two years and would finish it up this fiscal year, substantially ahead of schedule. It also released a handful of other announcements, including an online tie-in with Kroger KR to sell its merchandise on the grocer’s e-commerce platform, the promotion of two senior execs in a realignment of the C-Suite and the future creation of a marketplace on its website to allow third parties to sell to its customer base. All good things but hardly the sort of news that normally cause a stock to double in price in two hours…which is what BBB did in after-hours trading, before eventually settling down to a 70% jump by the time trading opened on Thursday.

By that time, it became clear what was behind the huge jump: social media-driven actions from Reddit and other sites that pushed followers to buy the stock and trip up short investors who were betting the stock would continue to decline, as it had since the company announced disappointing results at the end of September. The short investors were forced to buy shares to cover their losses and the stock once again appeared to be caught up in the whims of meme traders.

Throughout Thursday and into Friday morning the stock settled back down, still up from its starting point on Monday morning, but now trading at around $20 a share, down from its Wednesday peak of close to $23. News of its aggressive Black Friday promotional plans released Thursday didn’t have much of an impact but Friday turned out to be another day all together.

That’s when it reversed direction again, following a report from Citron Research projecting the stock could go as high as $50 to $70 a share and comparing it to an earlier May 2017 forecast for RH RH that proved to be especially prescient. RH was trading at around $52 a share then but has since skyrocketed to $660 and has topped the $700 figure several times.

Basing it on the stock buyback, Citron wrote “The last time we saw a buyback this aggressive and bullish was from RH.” That got trader’s attention for sure and by the end of trading on Friday BBB was up more 12%, matching its Wednesday high and taking it back to the range it traded in before the poor earnings news in September.

Bed Bath & Beyond, for its part, is trying to keep its head down and out of the line of fire of volatile traders. Speaking on CNBC this week, before the Citron release, Tritton said, “We’re not in it for the day by day, we’re in it for the long term. We’ve got a process to assess and evaluate really prudent spend to maximize shareholder value.

“Shares shooting up to $27.32? That’s a moment in time, not part of the overall plan to invest at those levels.”

He said the company is still on the right track, a point that Citron seemed to reinforce. “We’ve seen this a few times before, unfortunately … where we see these spikes and then a regrouping. When things settle down, we will have the right share price to be able to purchase ahead of what we see is our three-year trajectory.”

In the meantime it’s a good thing that one of products Bed Bath & Beyond sells is the large, jumbo-size jar of aspirin. Tritton gets an employee discount too.