The last reported short interest for BBBY — not Bed Bath & Beyond (OTCMKTS:BBBYQ) stock — was 18.72% as of April 14, equivalent to 103.77 million shares. Generally, a short interest above 10% is considered high, while a short interest above 20% is considered very high.
Currently, there are 200,000 shares of BBBYQ stock available to short. That figure reached as high as 5.3 million earlier today. Still, the cost to borrow (CTB) fee for Bed Bath remains relatively low in relation to a short squeeze, tallying in at 8.59%. The average CTB fee for a stock ranges between 0.3% and 3% per year, although potential short squeeze stocks often carry fees above 10% and 20%.
Investors Are Betting on a Short Squeeze in BBBYQ Stock
The BBBYQ crowd has been calling for a short squeeze on social media lately. However, BBBYQ stock is up by around 200% this month, so the peak of the short squeeze may have already passed. Anyone investing in the bankrupt Bed Bath now is likely playing with fire and risking their hard-earned capital.
Shareholders of BBBYQ stock should watch out for a major catalyst on June 1 and in the days following. That day marks the deadline for Bed Bath’s debtors to submit a stalking horse bid to purchase some or all of the company’s assets. A stalking horse bid acts as a reserve bid which other bidders cannot undercut. After that, bidders will have until June 7 to place a final bid.
Once the final bids have been placed, an auction, if necessary, will be held on June 14 in New York City. After that, June 19 will mark the deadline for anyone to file an objection to the sale. Finally, a sale hearing will be held on June 21 for the court to consider the bids and to make a decision.
Shareholders and traders of BBBYQ should expect heavy volatility leading up to these dates, which could create tradable but extremely risky scenarios. The Street notes that shares of a bankrupt company during its sale process are generally halted or suspended to protect shareholders from volatility and to allow for a fair bidding process.
In conclusion, BBBYQ remains a risky bankrupt investment that’s sure to see volatility in the coming weeks.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.