Bed Bath & Beyond Inc. (NASDAQ: BBBY) probably will declare bankruptcy soon. Its sales continue to fall over 20% year over year. It does not have enough money to pay suppliers for inventory. It recently closed 150 stores. Yet, the stock has more than doubled in the past week, then fell by over half and then recovered. (See which companies make the most profit per second.)
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Some of the investors who drove it higher have been punished in the past three days. Some have flourished. The stock traded at $5.57 on January 12th. It fell to $3.39 on the 16th and rose to $4.14 on Tuesday.
Bed Bath & Beyond is among the most recent speculation stocks. GameStop and AMC held similar positions not long ago. Day traders try to time their entrance and exit. Suckers are left on the other end of cleverly timed transactions. The internet is a ready means to spread information about public companies. Sometimes, this information is inaccurate, or even false.
The bedrock case that the fluctuation in shares should not happen is that a bankruptcy will wipe out common shareholders completely. Bed Bath & Beyond’s debt is so high that creditors will own all its assets, and this could happen within a matter of weeks.
The wild trades in Bed Bath & Beyond are a sign that the U.S. Securities and Exchange Commission has not stepped forward to investigate the causes. It should, given how much rumors have been the trigger. Some of these rumors are created to catch the eyes of people who do not understand what bankruptcy means. The wild price changes do not have a foundation.
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