Bed Bath & Beyond Had Big Earnings Miss. The Stock Is Jumping Thanks in Part to Reddit Traders.

view original post

Comparable-store sales at Bed Bath & Beyond fell by 7%.

Justin Sullivan/Getty Images

Shares of Bed Bath & Beyond are up about 9% even after the company’s financial results fell short of analysts’ expectations. Some of the market moves were attributed to Reddit traders on the social media platform.

Bed Bath & Beyond management also warned of a potential loss for the full year, amid pressure from promotions, store traffic, and supply-chain crunches.

The stock (ticker: BBBY) was up as much as 23% this morning. Around noon, it was trading about 7% higher at $14.29. Shares had been down 11% in premarket trading.

Wells Fargo analyst Zachary Fadem, who rates the stock Underweight with a price target of $12, in a research note on Thursday, attributed the positive stock reaction to elevated short interest and the company’s reiteration of $265 million in buybacks in the fiscal fourth-quarter.

Some of that interest was driven by Reddit meme traders, who took to a thread on the platform on Thursday morning. Several of the posts were optimistic. “I feel good about where we are after listening to the earnings call; stay the course folks!” according to one of the thread replies.

That interest, along with the planned buybacks, was enough to push the stock into positive territory despite the retailer posting a net loss of $276 million for its fiscal third quarter ended Nov. 27. The company turned in an adjusted loss of 25 cents a share, while the consensus call among analysts tracked by FactSet was for a profit of a penny per share.

“We believe fundamentals are deteriorating, LT goals appear aggressive and cash appears to be dwindling into a period of heightened business investment,” Fadem wrote in the note.

A lack of inventory due to supply-chain problems cost Bed Bath & Beyond about $100 million in sales, Chief Executive Mark Tritton said in a news release. Issues escalated during December, the company said, an indication that results for the current quarter could be hit as well.

Investors expressed serious concern on the company’s earnings call on Thursday morning—they posed questions regarding long-term growth strategies and plans to achieve them.

“It’s not about urgency,” Chief Financial Officer Gustavo Arnal said on the call., adding that it’s about managing costs. He said the company in April would provide earnings guidance for fiscal 2022.

Comparable-store sales, also known as same-store sales, declined 7% in the quarter.

The company said it may slide into the red for fiscal 2021, predicting a per-share result between a loss of 15 cents and breaking even. It had previously forecast a profit of 70 cents to $1.10 a share.

The company’s earnings follow a drop in the stock on Wednesday of 11%. The stock has fallen 16% from one year ago.

Write to Logan Moore at logan.moore@barrons.com