The 75% Surge at Bed Bath & Beyond Continues Massive Rally Defies Bears.

• Analysts lower the company, resulting in a 349% increase in shares.

• This month, short sellers suffered $662 million in paper losses.

Bed Bath & Beyond Inc.'s 349% three-week rally, which has helped reignite a wave of meme stock buying, contradicts Wall Street banks' warnings about the firm's premium valuations.

The purchasing rush continued on Tuesday, with the stock rising as much as 79% before reducing gains to 29% and ending at $20.65 following two trading halts. According to Bloomberg data, the stock was the most frequently traded business, with 385 million shares changing hands, more than 20 times the three-month average.

The surge has occurred despite the fact that at least three Wall Street banks have downgraded the home-goods firm and advised investors to sell the shares during the "meme stock craze."

Susan Anderson of B Riley Securities downgraded the retailer's $1.65 billion valuation to sell from neutral earlier on Tuesday. Before the stock's recent explosion, Baird's Justin Kleber downgraded shares, saying that the "fundamental risk/reward seems unfavorable" with market share losses increasing and the firm squandering cash.

None of this has slowed the spike in retail trading activity, which has pumped $99 million into the stock since July 26, according to Vanda data. According to the statistics, the net inflow included a record $46 million on Monday, when the stock surged 24% to close at its highest level since late April.

Some investors expect the stock to grow further. According to Bloomberg statistics, call options betting on the stock trading over $45 by the end of the week, as well as other contracts betting on a climb to $80 by mid-January, were among the most active derivatives related to the stock.

Meme Frenzy

According to data from analytics company S3 Partners, Bed Bath & Beyond short sellers have suffered $662 million in mark-to-market paper losses this month, including a $218 million hit on Tuesday. Given the concentrated short positions, the stock is "extremely squeezable" and will likely rise further as short sellers are compelled to cover their wagers, according to S3 Partners managing director of predictive analytics Ihor Dusaniwsky via email.

Related meme stocks GameStop Corp. and AMC Entertainment Holdings Inc. both experienced a surge in activity. The video-game retailer rose up to 15%, causing a trade stoppage, while the movie-theater operator recovered losses to increase 2.5%.

The most purchased asset on Fidelity's platform was Bed Bath & Beyond, with buy orders more than double those for Tesla Inc. Its ticker was trending on popular chatroom StockTwits and was the most cited on Reddit's WallStreetBets. Debt linked to the corporation surged alongside the stock on Tuesday, and was among the top gainers in the high-yield market.

Even after the rise, the stock is still down 61% from its top in January 2021, and experts predict further losses. Bloomberg figures reveal that the average 12-month price forecast of $4.49 suggests a roughly 80% decrease from present levels. Two-thirds of experts advise investors to sell stock, the highest proportion in at least a decade.