U.S. retail investors holding group stocks (Meme stocks) have sparked a frenzy again, with the most eye-catching on Tuesday being Bed Bath & Beyond (BBBY), a home-goods retailer.
BBBY fell at the opening, and then quickly turned up. In the morning, the increase was close to 80% . During the intraday , the circuit breaker was triggered to suspend trading . The gains narrowed in the afternoon, and finally closed up 29.06% at $20.65, a new closing high since April 6.
In addition to BBBY, other Meme stocks that battered hedge funds last year also staged riots. Game Station (GME), Express (EXPR) and Gaussian Electronics (KOSS) all rose more than 10% intraday.
What sparked the frenzy this time was a regulatory filing. RC Ventures, the venture capital firm owned by GME Chairman Ryan Cohen, bought 1.67 million out-of-the-money call options on BBBY expiring in January 2023, with an exercise price of $60 to $80 per share, the filings show. That means Cohen is betting on BBBY as high as $80, up fourfold from Monday’s close of $16.
The news encouraged users of the Reddit forum WallStreetBets. BBBY became the biggest topic and the most active stock on the forum that day. The intraday trading volume had exceeded 160 million shares . Some call options bet that BBBY could trade at more than 45% by the end of this week. The U.S. dollar, with some bets on a rise to $80 by mid-January next year.
RC Ventures is clearly the biggest beneficiary. It is reported that the company has held 9.45 million shares of 3B Home Furnishings since March this year, corresponding to an 11.82% stake. Tuesday’s rise alone has raised the net value of the investment by nearly $100 million .
Some analysts said that even hedge funds could not bear to miss this upsurge, and followed retail investors to buy, which caused other stocks to follow suit. In the past three weeks since July 26, BBBY’s stock price has risen by more than 550%. Investors have invested a total of 99 million US dollars to buy the stock. During this period, at least three Wall Street institutions have downgraded the stock. Two of them suggested taking advantage of the skyrocketing Meme stock. Sell ​​BBBY.
But obviously, these warnings have been ignored. With the US economy in a downturn and calls for a recession, the momentum of retail investors holding group stocks is worrying.