Bed Bath & Beyond Short Sellers May Have Turned $112M In Losses To Profit In Just 3 Days

Bed Bath & Beyond Inc BBBY shares were down another 4.7% on Friday after the company's turnaround plan failed to impress Wall Street.

Bed Bath & Beyond is one of the most heavily shorted stocks in the market, and short sellers have had a big week of gains as the market has lost faith in the popular meme stock.

The Numbers: Following Tuesday's close, S3 Partners analyst Ihor Dusaniwsky said Bed Bath & Beyond had about $386 million in short interest representing about 27.5% of the stock's adjusted float.

Bed, Bath & Beyond short sellers had endured about $112 million in 2022 mark-to-market losses, but those losses have shrunk significantly in the last three days, Dusaniwsky said. 

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Bed Bath & Beyond shares are now down 31.6% since Tuesday's close. Based on S3's numbers, short sellers may have completely erased their year-to-date losses in that stretch.

A 31.6% gain on $386 million in short interest represents about $121.9 million in profits, assuming the company's short interest has remained constant since Tuesday.

Epic Short Squeeze: Bed, Bath & Beyond's short interest is up 39.5% in the past year, according to Ycharts. Short sellers have been spot on with their bearish call up to this point.

Shares of the struggling retailer are down 65.8% over the last 12 months, which included a brief but extremely volatile short squeeze in August.

For several days, Bed, Bath & Beyond was the most popular meme stock on the WallStreetBets subreddit, which sent the stock soaring from under $5 in late July to as high as $30 on Aug. 17. In the two weeks that followed, the stock has now traded all the way back down to $8.27.

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Benzinga's Take: Meme stock traders certainly had an opportunity to make a quick buck during the Bed Bath & Beyond short squeeze in August, but short sellers willing to stomach the volatility have now also made a killing in the past two weeks.

In the most recent quarter, the company reported a net loss of $358 million and said same-store sales dropped 23% from a year ago.

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