Meme stocks surge leaves institutional investors “confused and baffled”
As anticipated by Asia Markets days ago, the Bed, Bad & Beyond (NASDAQ: BBBY) stock price has surged amid a meme stocks frenzy fuelled by retail investors determined to orchestrate a major short squeeze.
The homewares retailer gained 40 percent Monday. Close to 121 million shares were traded, making it by far the highest single day trading volume in the company’s history.
In the past 5 days, BBBY is now up 97% on no news.
Am analysis of mentions of BBBY stock on Reddit, shows it continues to be the most discussed stock on the platform ahead of trading on Tuesday.
But it’s not just BBBY. Other popular meme stocks have also had a resurgence in recent days.
A meme ETF, managed by New York-based Roundhill Investments is up 23% in the past 10 days. It is the ETF’s best winning streak since listing in December 2021.
However, investors have missed the additional alpha which would have been generated by BBBY’s meteoric rise. BBBY isn’t currently in the ETF’s top 15 holdings, which include AMC Entertainment, Coinbase, Roku, Peloton Interactive, Shopify, and GameStop.
WTF is happening?
Mirabaud Securities trader Mark Taylor told Bloomberg the sudden resurgence of meme stocks has stunned institutional investors.
“The smart guys are confused, baffled and fighting short positions from a position of weakness in terms of momentum and firepower.
“The lack of real understanding of why a sudden resurrection of the ‘meme-mentum’ bid could lead to some nefarious speculation about things being manipulated but what would be as much sour grapes speculation as anything real.”
Other experts believe the current meme stock rally can continue.
Former Wall Street hedge fund manager, Will Meade has a $15 price target on BBBY.
“Bed Bath & Beyond is identical to GameStop before it had a parabolic short squeeze. Both have Ryan Cohen involved, both are old school retail brand names, both were highly shorted.” said Meade.
But there’s also been words of warning for investors pilling into meme stocks at nose-bleed valuations.
“The Federal Reserve will snuff out irrational exuberance & destroy froth in the markets. Meme and junk stocks with weak EPS beware,” said Investment analyst, Marty Chargin
“The correlation between 2000 dot-com bust and today have merit,” he added.
Meme stocks to buy? Next potential short squeeze targets
Research conducted by Asia Markets shows the following smaller companies currently have some of the highest short floats in the U.S.
- Weber Inc. (NYSE: WEBR): ~60% short
- Revlon Inc. (NYSE: REV): ~60% short
- Enhabit Inc. (NYSE: EHAB): ~60% short
- PMV Pharmaceuticals Inc. (NASDAQ: PMVP): ~50% short
All will be stocks to watch if the army of so called ‘Apes’ on Reddit are further emboldened by the BBBY short squeeze and the resurgence in meme stocks continues.