Shares of Bed Bath & Beyond are on course to crash amid bankruptcy bets

Bed Bath & Beyond stock is still turning in speculative enthusiasm Because traders place bets, the retailer somehow avoids bankruptcy – which leads to huge coverage by short sellers.

Shares were up 20% in pre-market trading Thursday. If Bed Bath & Beyond stock opened at current levels, shares would be up more than 150% since Monday’s opening price.

inventory – which contains one of the Most visited index pages On Yahoo Finance over the past 24 hours – up 69% on Wednesday. This followed gains of 28% on Tuesday and 24% on Monday.

Short selling data may help explain what is happening in the market for BBBY shares.

Bed Bath & Beyond’s short interest is $82.7 million, or a whopping 52.07% of the shares outstanding per data from S3 Partners. The stock has the second largest short interest of stocks over $10 million in short interest.

The huge advance comes this week as Bed Bath & Beyond didn’t report “bankrupting” the world in its morning earnings statement on Tuesday. This encouraged bulls in the stock, causing bears – aka short sellers – to quickly cover their short positions, only creating more bullish momentum in the stock.

And despite the upbeat business, Bed Bath & Beyond has one foot in the retail graveyard of Sears, Circuit City, and many others. So the optimist can still be eliminated by Bed Bath & Beyond.

“BBBY is becoming less institutional and more retail on the long side with significant institutional activity on the short side (the vast majority of shorting is dome by institutions),” explained Ihor Dusanewski, managing director of S3 Partners. “This combination makes for a volatile stock because fundamentals are not the primary driver of price movements — the stock has become more momentum and a technical name — and sudden price swings would not be out of the ordinary (as we see stock price action today). If the risk of bankruptcy becomes more certain, The possibility of a short squeeze on BBBY becomes less and less, we can expect a minimum short-covering as short sellers wait for a $0.00 share price.”

Shares of Bed Bath & Beyond crashed 46% last week as a company He said Bankruptcy was on the table as it works to prop up its tattered balance sheet after the disastrous holiday shopping season.

A shopper carries her bags as she leaves her bed, bath and beyond in New York, June 23, 2010. The retail store is preparing to report strong first-quarter earnings buoyed by continued orders with consumers investing in their homes again.  Photograph: Keith Bedford/Reuters.

A shopper carries her bags as she leaves her bed, bath and beyond in New York, June 23, 2010. REUTERS/Keith Bedford (USA – tags: business)

CEO Sue Goff repeat Tuesday that all options remain on the table to save the retailer.

Bed Bath & Beyond’s quarterly sales crashed 33% from a year earlier, resulting in an adjusted operating loss of $225 million. The company ended the fiscal quarter with only $153.1 million in cash on the balance sheet, a situation that worries sellers so much that they are withholding shipments to the company or raising credit terms.

In a roughly 10-minute earnings call without analyst questions, Gove named an additional $80 million to $100 million in cost cutting. next to whom 150 store closingsthe company plans to lay off more corporate workers.

Brian Suzy It is a comprehensive editor and Anchor at Yahoo Finance. Follow Suzy on Twitter @tweet and on linkedin.

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