Here’s why Bed Bath & Beyond, AMC, and GameStop stocks are rocking the stock market

Wall Street analysts remain confused as volatile trading centered around a few stocks took place on Friday and Monday.

Fundamental analysis: “WallStreetBets” wreak havoc in stocks

It seems that Reddit’s subforum “WallStreetBets” has facilitated extremely high volatility in certain stocks. This space is used by retail investors to discuss investments and promote certain stocks. 

They intentionally picked stocks that are attracting huge selling interest, in order to create the so-called “short squeeze”. This process takes place when the demand outweighs supply as sellers are covering their positions and exiting the market.

As a result, it seems that short-sellers have lost billions in a matter of days as they were forced to liquidate their positions. According to a report, short-sellers lows around $3.3 billion this year, with almost half of this amount taking place on Friday. 

Bed Bath & Beyond downgraded

Bed Bath & Beyond (NASDAQ: BBBY) stock price is trading in an extremely volatile manner in the past few days. Shares are up about 80% this year with analysts confused given that there are no new fundamental catalysts. As a result, the stock received two downgrades today as valuation is no longer attractive. 

UBS analyst Michael Lasser moved to downgrade the stock to “Sell”.

In a similar fashion, Raymond James analyst downgraded the stock to “Market Perform” from the old “Strong Buy” rating.

Shares are now trading at $32.50 after hitting a four-year high at $47.73 yesterday. Buyers are trying to force a weekly close above the confluence of moving average lines around the $41.00 mark. 

GameStop frenzy continues 

GameStop (NYSE: GME) is one of the hottest stories in the stock market today. Shares of the video game retailer soared nearly 700% on extremely strong buying interest and a short squeeze. 

GameStop stock price trades above the $100.00 mark at the moment, despite the fact that the median Street price target for GameStop is $11.96. 

Shares were trading mostly around the $20 handle before exploding higher on Friday and Monday. Today alone, the GameStop stock price is up over 40%. 

AMC is another leading “short squeeze” candidate

Despite the fact that cinema stocks are trading glued to the bottom for months given the state of their industry amid the pandemic, it seems that buying interest in AMC Entertainment (NYSE: AMC) is still high. Last week, shares of AMC soared over 50% before adding a further 25% yesterday.

This way, AMC share price is up nearly 100% since Thursday as retail investors force short-sellers to liquidate their positions. Today’s high of $5.19 is the highest the stock traded since September last year.

In addition, inventors liked that the bankruptcy talk seems to be off the table, in the short-term at least. The company announced it managed to raise $917 million in debt and equity.

Summary

An army of retail investors has forced short-sellers to abandon their positions in certain stocks, paving the way for extreme volatility and sharp market moves on Friday and Monday.