The Redditors Should Know When They Are Conquered

Shares of home-goods retailer Bed Bath & Beyond Inc. tumbled to less than $5 last week, marking a 90% slide from the peak in early 2021, as the company ousted its chief executive officer following a failed turnaround effort. To the uninformed, this may seem like just another troubled retailer unable to cope with rapidly changing consumer tastes. The reality is that the plunge represents so much more, perhaps bringing a welcome end to one of the wildest periods in the history of Wall Street.

Bed Bath & Beyond was one of a handful of companies along with GameStop Corp. and AMC Entertainment Holdings Inc. that inexplicably captured the fancy of legions of novice traders sitting at home and bored during the pandemic in late 2020 and early 2021 in what became know as the meme stock frenzy. It didn’t matter that a troubled business model caused Bed Bath & Beyond’s revenue and earnings to suffer in the second half of the last decade, leading it’s shares to drop from around $80 in 2014 to less than $4 at the start of the pandemic. For those plying the Reddit message boards and exchanging uninformed opinions and analysis, Wall Street had it all wrong. These companies were diamonds in the rough, with their true potential overlooked. Bed Bath & Beyond shares shot up five-fold over the course of a few months to as high as $53.90 in January 2021.

But Wall Street wasn’t wrong. In what has become one of the worst years on record for the stock market, with the S&P 500 Index down 20%, the Solactive Roundhill Meme Index is down much more, tumbling in excess of 50%.