Bed Bath & Beyond Shares Explode After Company Announces This News

Shares of retailer Bed Bath & Beyond were exploding over 80% in after-hours trading on Tuesday after the company announced the launch of a digital marketplace that will sell goods from third-parties.

This is in addition to a tie-up with grocery chain Kroger and announcing that its stock buyback program was ahead of schedule. The company also unveiled some executive leadership changes.

While all of the news was exciting, the dramatic share increase is more than likely contributed to a short squeeze. Hedge funds that had bet against the stock were forced to scramble and buy back their shares to cut their losses.

The company said Tuesday it would create a digital marketplace to establish a bigger presence online.

“Marketplace is yet another example of how we continue to redefine our business model,” CEO Mark Tritton said in a statement. “We are developing new avenues of long-term profitable growth to allow us to organically build on our existing authority in the Home and Baby categories.”

Kroger will also start selling some of Bed Bath and Beyond’s home and baby products on its website and in select stores as part of a pilot starting in 2022.

A Kroger spokeswoman said the number of stores, along with more details, will be announced later.

The company has named Anu Gupta as its chief growth officer, a newly created position and has made Rafeh Masood as chief customer officer, another newly created role.

Additionally Bed Bath and Beyond expects to complete a $1 billion share repurchase plan by the end of fiscal 2021, two years ahead of schedule.

It also helped that the stock was mentioned on Reddit after the bell according to Swaggy Stocks. The company has been a meme favorite among Reddit this year.

Bed Bath & Beyond was among one of the most heaviest shorted stocks having 27% of its shares available for trading sold short. FactSet found the company to be the third-highest among the 1,500 largest U.S. stocks.

According to Seymour Asset Management founder Tim Seymour, who spoke on CNBC’s “Fast Money,” Bed Bath & Beyond’s shares have been fueled by the interest of newer and nontraditional investors.

“There are a number of these broken companies that are finding ways to reinvent themselves,” he said. “Whether some of these companies are [reinventing themselves] or not, the capital markets are allowing them to get there and then figure it out later. And that’s been one of the great stories of 2021.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.