Bed Bath & Beyond Is Skyrocketing Again. How High Can It Go?

What happened

Bed Bath & Beyond (NASDAQ:BBBY) stock was soaring once again today as the short squeeze in the meme stock accelerated, attracting more traders on platforms like Reddit's WallStreetBets. Today was the 14th gain out of the last 15 sessions for the stock.

Shares raced higher this morning, gaining as much as 88.4%, before cooling off modestly. As of 11:44 a.m. ET, the stock was up 57.8%.

So what

Once again, there was no fundamental reason for the spike in the home goods retailer. This was a pure meme-driven short squeeze like the ones we saw in stocks like GameStop and AMC Entertainment last year. One Bed Bath & Beyond (BBBY) thread on WallStreetBets had more than 9,000 comments in the last two hours, touting price targets like $60 and $80 as well as rampant call-option buying in order to accelerate the short squeeze, or gamma squeeze as they're known with options. One trader said they'd put $87,000 into Bed Bath & Beyond, showing how large some of these individual bets are.

Shortly before noon, the trading volume had reached more than 200 million, meaning the average share had already been traded more than once. That's also a possible sign that the squeeze was reaching a fever pitch. That daily volume is already more than the stock has had on any session during the rally.

It's unclear if short sellers are closing their bets, but the stock was one of the most shorted on the market as of July 29 with 103% of the float sold short, setting the stock up for the massive short squeeze.

Now what

Bed Bath & Beyond stock is now up nearly 700% since July 26, and with the stock going parabolic today, that could mean that the rally will fizzle soon, as that kind of price action is usually a sign of volume peaking. Still, the lesson from the first meme stock rally is that it's mistake to bet against the meme traders. Or, as the classic market aphorism goes: "The market can stay irrational longer than you can stay solvent."

So the Bed Bath & Beyond rally could still go on for several more days.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.