Wild Bed Bath & Beyond stock moves expose a larger problem with investing

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Brian Sozzi

For vocal Bed Bath & Beyond bear Anthony Chukumba, the recent gyrations in Bed Bath & Beyond’s stock — despite the retailer being on the brink of bankruptcy — underscore the need for people to boost their financial literacy.

“It is a living, breathing example of the need for financial literacy education in the United States,” the Loop Capital analyst said on Yahoo Finance Live (video above). “I mean, Bed Bath & Beyond is going to go bankrupt.”

Bed Bath & Beyond finished Friday’s session down 30% in another day of volatile trading for the meme crowd favorite. On the week, shares surged an eye-popping 179%.

The wild upward price action occurred after Bed Bath & Beyond didn’t utter the world “bankruptcy” on its otherwise brutal Tuesday morning earnings release. The lack of a bankruptcy announcement seemed to embolden bulls in the stock, causing bears — specifically short-sellers — to quickly cover their shorts, only creating more upward momentum in the stock.

Then, on Friday, the New York Times reported that retail-focused private equity shop Sycamore Partners was kicking the tires on buying parts of the near-death home goods seller.

“As is our practice, we do not comment on speculation of this nature,” a Bed Bath & Beyond spokesperson told Yahoo Finance via email.

A Bed Bath and Beyond store. (Getty Images)

A Bed Bath and Beyond store. (Getty Images)

In any case, to Chukumba’s point, investors who drill down into Bed Bath & Beyond’s fundamentals with their evaluation tools of choice would find that the numbers clearly do not justify a 135% stock gain in a week.

“The fact that the stock is up since they reported earnings is nonsensical, in a word, quite frankly,” Chukumba added. “When they file [for bankruptcy], the equity will be worthless.”

A painful lesson will be learned by some if that happens.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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