What went on.
S&P Global Market Intelligence data shows that Bed Bath & Beyond (BBBY 21.82%) stock went up this week, rising 30% through Thursday trading while the market as a whole went up only 1.5%.
Investors in the struggling store were not made whole again by that jump. In fact, since the beginning of 2022, shares are still down nearly 30%. But the meme stock continues to be very volatile, which this week led to short-term returns that shook the market.
Bed Bath & Beyond didn't say anything that would have made its stock go up. In fact, the business's last operating update had a lot of bad news about it. In the sales period that ended in late May, sales dropped by more than 20%, which led to a sharp drop in profits.
The operating loss for Bed Bath & Beyond was $339 million, compared to $72 million a year ago. In a press release, interim CEO Sue Gove said, "The simple truth is that our first-quarter results are not as good as we had hoped."
Still, investors chose to buy more shares this week, mostly because many meme stocks became popular again. Bed Bath & Beyond's stock price has gone up this week, just like AMC Entertainment Holdings and other similar companies.
Investors shouldn't let that bounce make them think that the business of the store is about to make a big comeback. Bed Bath & Beyond has had a lot fewer customers in the last few months, which is made worse by the fact that people's shopping habits are changing quickly. These market share losses are happening at a bad time, right before the busy holiday shopping season, when inventory levels are rising.
Management is trying as hard as it can to use promotions to get inventory back in good shape, but investors are likely to see more losses and write-down charges over the next few quarters because Bed Bath & Beyond's sales are going down.
Even though volatility could cause more stock price jumps like the ones investors saw this week, sharp drops are also likely. The safer choice is to buy stocks from successful stores and keep them for a long time.
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