Investors betting that Bed Bath & Beyond Inc.$Bed Bath & Beyond(BBBY)$ would be the next meme stock to go to the moon are facing the harsh reality that fundamentals are particularly important during a market rout.
Shares of the home-goods retailer sank 24% to $4.99, crashing to the lowest since April 2020, after the company reported disappointing earnings. It follows a tumultuous two-year stretch when the company captivated retail traders alongside stocks like GameStop Corp.$GameStop(GME)$ and AMC Entertainment Holdings Inc$AMC Entertainment(AMC)$ .
“The retail investor is learning a tough lesson as all the favorite meme stocks are getting crushed,” said Ed Moya, senior market analyst at Oanda. “The outflows for Bed Bath & Beyond, a favorite retail stock, have been significant and the coordinated buying is not happening.”
Bed Bath & Beyond’s quarterly loss was wider than analysts expected and first-quarter comparable sales and net sales also fell short of estimates. Vital Knowledge’s Adam Crisafulli said “investors expected the worst out of Bed Bath & Beyond, and they still disappointed.” The retailer’s stock extended losses from its January 2021 closing high to 91%.
Yet retail investors showed that old habits die hard. Bed Bath & Beyond was among the most bought stocks on Fidelity’s platform as individuals ignored the sales miss, piling in amid the share slump. The stock saw a surge in interest on websites like Reddit’s WallStreetBets and Stocktwits with the company’s ticker trending for most of the day on both platforms.
Just minutes before releasing earnings, the Union, New Jersey-based company named Sue Gove as its interim chief executive officer, replacing Mark Tritton.
The company was caught up in the meme stock mania at the start of last year and again that June as investors snapped up shares in a coordinated effort channeled through social media platforms.
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