(Bloomberg) -- The 510% three-week surge by Bed Bath & Beyond Inc., which has helped reinvigorate a wave of meme stock buying, stands in the face of Wall Street banks sounding the alarm on the stock’s lofty valuations.
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The buying spree extended on Tuesday as the stock soared 75% to $28.04 and triggered a trading halt as more than 160 million shares changed hands to make it the most actively traded stock, Bloomberg data show. Call options betting on the stock to trade above $45 by the end of the week and others that would be in-the-money if it traded at $80 by mid-January were among the most active derivatives tied to the stock, according to data compiled by Bloomberg
The surge has come even as at least three Wall Street banks downgraded the home-goods company, including two that recommended investors sell the stock amid the “meme stock frenzy.” Susan Anderson at B Riley Securities earlier on Tuesday cut her rating to sell from neutral, and called the retailer’s $2.2 billion valuation “unrealistic.” Baird’s Justin Kleber downgraded shares last week, before the stock’s latest burst, warning the “fundamental risk/reward looks unattractive” with market share losses accelerating and the company burning cash.
None of that stopped the surge in buying from the retail trading crowd which has pushed $99 million into the stock since July 26, according to data compiled by Vanda. The net inflow includes a record $46 million on Monday when the stock spiked 24% to close at the highest since late April, the data show.
Fellow meme stocks GameStop Corp. and AMC Entertainment Holdings Inc. also saw a burst in activity. The video-game retailer spiked 12% to trigger a trading halt as the movie-theater operater erased losses to rise 2.4%.
Bed Bath & Beyond was the most bought asset on Fidelity’s platform with buy orders far outpacing those to sell at 10:51 a.m. in New York. Its ticker was the most mentioned on Reddit’s WallStreetBets and was trending on popular chatroom StockTwits.
Even after the surge, the stock remains down nearly 60% from a January 2021 peak. GameStop and AMC have also wiped out more than half their market value from highs hit last year.
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