Bed Bath & Beyond Stock Price and Forecast: Why did BBBY stock collapse?

• Bed Bath & Beyond closed Wednesday up over 15%.
• But that is a collapse from premarket when BBBY was up nearly 90%.
• BBBY stock is a meme name and saw heavy retail trading on Wednesday.

That was a rollercoaster ride as the back to the future trend continues with meme stocks roaring back into life with some gains sparking memories of the original move back in January of this year. BBBY surged on Wednesday and was up nearly 90% at one stage as retail traders piled into the name. The stock was unable to hold onto such huge gains, which is not surprising, and dropped alarmingly to close only 15% higher. Most stocks would bite your hand for a 15% gain, but when you have seen it nearly double perspective is required. 

BBBY chart, 15-minute

Bed Bath & Beyond (BBBY) stock news

The announcement of a tie-in with Kroger (KR) to directly offer its customers a selection of BBBY products helped fuel the parabolic move and added to this was news of an acceleration of BBBY's $1 billion buyback program. It is likely the acceleration of the share repurchase program that really got the excitement levels of traders up as 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." 

Bed Bath & Beyond CEO Mark Tritton said on Wednesday about the buyback: "We'll be prudent within the year on when and how we purchase." This appears to sound somewhat cautious, but given we only have two months left for the buyback now there is not much time to be prudent. 

Bed Bath & Beyond (BBBY) stock forecast

We really cannot reiterate this enough, go back and look at the most recent results. You do not have to go too far back. BBBY earnings were on September 30, and EPS missed by a whopping amount. The stock tanked.

Here we are barely one month later and all is forgiven? We are not so sure. The stock is reportedly well shorted with a reputed 30% short interest. Our Refinitive figures list it at 26.5% as of October 14. Significant but at only 4 days to cover based on average volumes, it is not super high and is a lot lower than back in January. Looking at the BBBY chart gives a clear technical picture.

The move spiked up into a huge resistance level. $28.30 is the point of control or the price with the highest volume. The 200-day moving average is at $26.41, and the yearly Volume Weighted Average Price (VWAP) is also at $28. This creates massive resistance as highlighted in the chart below. It is the consolidation phase for most of the summer. That will be tough to crack. The powerful gap up on Wednesday has almost totally retraced. Holding $20 gives bulls some hope that the move may stabilize. Breaking $20 and it is all over, and the gap back to $17 will get filled then.

BBBY 1-day chart