Bed Bath & Beyond Stock Price and Forecast: Why is BBBY stock up again today?

Here we go again. Another return to January as one more meme stock roars back into life. Some new ones have joined the club. I'm looking at you Avis (CAR), but BBBY stock has been a meme favourite for a while now, so no surprise to see it rally hard as risk floods back into equities. This could get interesting tonight if the Fed gets hardcore. Rate rises are off the table, but taper talk is cheap. The Fed probably, well hopefully, realises it needs to do something to reign in this bull market, and risk stocks would be the first to suffer. Protect your portfolio accordingly.

BBBY 15-minute chart

Bed Bath & Beyond (BBBY) stock news

To infinity and beyond! Forget Bed Bath & Beyond. After two solid days of rally on with a gain of 8.85 on Monday and 9% on Tuesday things have just gone parabolic for BBBY stock. It is up over 50% in the premarket on Wednesday as retail traders pile in. The catalyst was the announcement of a tie in with Kroger (KR) but more significantly an acceleration of its share buyback plan. We have seen many companies increase or speed up buybacks as companies are awash with cash and cannot generate sufficient return for shareholders by investing it elsewhere.

BBBY had embarked on a $1 billion share buyback plan to finish at the end of 2023. Now it has brought that forward to the end of 2021, so just two months. Telsey Advisory Group said in a research note to clients, "The announcements should be received positively by investors, especially the share buyback, which we estimate has the potential to reduce the share count by 15% and boost 2022 EPS."  

BBBY shares are surging despite being downgraded by Loop Capital. The shares are trading at $25.96 in Wednesday's premarket for a 55% gain. The stock had been up 80% on Tuesday night.

Bed Bath & Beyond (BBBY) stock forecast

We would urge extreme caution in chasing BBBY stock up here. First, as mentioned in our Avis Budget (CAR) article previously, volatility will be sky high after a move such as that, so buying options is hugely expensive and will incur significant theta (time decay) penalities. Also from the BBBY chart below, this move has brought the stock into a high traffic resistance area from back in early summer. For most of June and July, BBBY was stuck in a $26 to $30 range before eventually breaking lower.

Volume profile bars on the right of the BBBY graph show strong volume at these levels. Volume equals resistance. It is not that long since the last earnings release, and EPS missed by over 90% and revenue was also behind. The 200-day moving average is at $26.44, so we have strong resistance up at current levels in the premarket. 

BBBY 1-day chart