Published - January 12, 2023 @ 11:41 AM (EET)

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Shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) climbed another 69% to $3.49 a share in Wednesday trading, bringing this week's gains to 166%, erasing the share-price slump last week after the company's management said in a Securities and Exchange Commission filing that it was considering filing for bankruptcy. 

On Monday, the retailer's shares rose 24%, 28% on Tuesday, and more than 225 million shares changed hands on Wednesday. The record advance is noteworthy given that the stock is now trading at early-December levels and sparked a rally in other so-called meme stocks.

Meme stocks, including AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME), also had big days on Wednesday, climbing 21% and 7.2%, respectively.

WHAT HAPPENED

Following poor sales and an inability to compete with large online and big-box retailers, people familiar with the matter said last week BBBY is preparing to seek bankruptcy protection in the coming weeks.

At the time, sources said the home goods retailer was considering skipping debt payments due on 1 February, a typical move for distressed companies on the verge of bankruptcy.

Moreover, Wall Street analysts have been dropping their coverage of the company since last summer, worsening the picture for Bed Bath & Beyond. Three brokerages tracked by Bloomberg have stopped covering the stock, with Raymond James becoming the latest on Wednesday.

Still, some retail traders continue to bet they can outplay short sellers one final time.

NOW WHAT

Managing director Ihor Dusaniwsky at S3 Partners notes that institutional shareholders have fled the company, leaving a more retail-heavy investor base to bet on Bed Bath & Beyond's stock.

He wrote, "this mix makes for a volatile stock since fundamentals are not the primary driver of price moves -- the stock is becoming much more of a momentum, and technical name -- outsized and sudden price fluctuations will not be out of the ordinary.

Dusaniwsky expects Bed Bath & Beyond's stock to eventually fall to zero if the threat of bankruptcy becomes more certain.

The company didn't immediately respond to requests for comment on this week's stock swings.