Meme Behavior – The Shares of Bankrupt Companies
Retail investors will always strike and cause havoc whenever they want, regardless of whether investor sentiment is negative or positive. With the ability to push stocks positive very easily, they aren’t afraid to go after some of the worst companies in the stock market when it comes to financial health and fundamentals. First came GameStop, and more recently they have targeted one of their usual favorites along with a new suspect.
Bed Bath & Beyond is arguably the third favorite stock of meme traders, just behind AMC and GameStop. Back in August, we witnessed a crazy rally of over 500 percent and a descent just as quick, both due to Ryan Cohen’s actions of buying stock and selling stock, respectively. Since then, Bed Bath & Beyond has started to enter the purgatory known as bankruptcy, causing their stock to fall by almost 50 percent between January 4th and 6th to $1.31. Ever since that day, shares rose by as much as 300 percent in the ensuing days, now currently sitting at $3.94. This situation mirrors Hertz very well, with retail investors flooding in to boost the share price. Retail investors give hope that maybe one more time, a massive short-squeeze could occur as the short interest is high, and they are now looking for buyers or lenders before they officially enter bankruptcy. The other suspect just entered bankruptcy, and they would be none other than Party City. Around the same time as Bed Bath & Beyond, they rose by more than 150 percent for similar reasons, but their situation is a lot worse. On Wednesday, they filed for Chapter 11 bankruptcy with the hopes of coming back in a few months, and their shares have now been delisted from the New York Stock Exchange. Investors were able to utilize high short interest there, but Party City has now become a fallen soldier in a struggling retail industry which is ironically what we talked about earlier.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.