[ad_1]
A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York, on Friday, Jan. 6, 2023.
Johnny Milano | Bloomberg | Getty Images
A group of highly speculative stocks rallied double digits on Wednesday as retail investors pushed meme names up again in the new year after a dismal 2022.
Bed Bath & Beyond rallied a whopping 50% to trigger the trend in morning trading Wednesday, and shares last traded up 39%. Shares of GameStop, the original star of 2021’s meme stock mania, climbed more than 5 after gaining over 10% earlier. AMC Entertainment soared about 16%.
Meme stocks rallying one more time
| Stock | Short interest % float | Wed. Gain | % off 52W high |
|---|---|---|---|
| Bed Bath & Beyond (BBBY) | 48.9% | 60% | -89% |
| AMC (AMC) | 21% | 15% | -78% |
| GameStop (GME) | 21% | 8% | -62% |
Source: FactSet
“We don’t love the strength in nonsense stocks like AMC, CVNA, GME, BBBY, PRTY, etc.,” said Adam Crisafulli, founder of Vital Knowledge. “This just means people are blindly chasing.”
During early 2021, a band of retail traders joined forces on social media to bid up a slew of heavily shorted stocks, creating massive short squeezes that inflicted high pain on short sellers. These meme stocks experienced big pullbacks last year when risk sentiment shifted amid aggressive rate hikes. GameStop fell 50% in 2022, while AMC tumbled 75% and Bed Bath & Beyond plunged 82%.
While the short interest in these names has come down from its peak after the jaw-dropping episode, it still remains much higher than average.
About 48% of Bed Bath & Beyond’s float shares are sold short, compared with an average of 5% short interest in a typical U.S. stock, according to S3 Partners. For GameStop, the short interest stands at 21%, down from more than 100% at the height of the meme stock mania in 2021, according to FactSet. AMC has also 21% of shares sold short.
A short squeeze happens when a stock jumps sharply higher, it forces short sellers to buy back shares in order to limit their losses. The short covering tends to fuel the stock’s rally further.
[ad_2]
Image and article originally from www.cnbc.com. Read the original article here.