Something weird as hell is going on with Bed Bath & Beyond on Reddit
Bed Bath and Beyond is a retail company that specializes in home goods and décor. They've been financially struggling for a while, and in recent months, have been aggressively downsizing by closing stores to avoid bankruptcy. Anecdotally, when I went to the Bed Bath and Beyond in Yonkers, New York, this past August, they didn't have any forks in the store. They've seen better days, it would seem.
Because of this long, slow, decline they've been targeted by Private Equity firms and short sellers. Short sellers are investors who bet against the value of their stock — in other words, they profit when the value of the company goes down. This is done via various fun-sounding financial instruments like a "margin account," which are very exciting to talk about if you're into that sort of stuff. It's an extremely high-risk investment, and thus typically done by institutions like hedge funds which can stand to lose a couple million on a bad day (or rather on a good day, because recall that they profit when companies do poorly). Private equity firms, sometimes called Vulture Capitalists, purchase companies that are failing, drive them into the ground and sell the scrap for a profit.
Since Bed Bath and Beyond is receiving lots of attention from these types of capitalists, a small community has developed with the aim of screwing over these short-sellers and firms. A righteous cause, no? Well, there are some very strange things about this community, and I think ultimately, making enemies of hedge funds doesn't automatically make you the good guys.
The gathering point of this community is r/BBBY, a subreddit whose name refers to the stock ticker of Bed Bath and Beyond. They are an offshoot of r/WallStreetBets, a notorious community of meme stock traders and crypto enthusiasts who triggered the January 2021 GameStop fiasco. GameStop was in a very similar situation to where Bed Bath and Beyond currently is — a declining retailer preyed upon by short-sellers and vulture capitalists. WallStreetBets saw the potential of organizing a large group of individual investors and triggered a short squeeze.
A short squeeze happens when the value of falling stock suddenly goes up. The conditions upon which the short-sellers were relying have suddenly turned upside down, causing them to scramble to buy back the stock. This triggers a feedback loop, because the short sellers want to cover their losses as soon as possible, which only makes the value go up even more. So on and so forth until the meme stock traders who poured their life savings into GameStop get an absurd return on their investment as the stock hits stratospheric values. That's what these people on r/BBBY are praying for, and they'll fixate on any news that hints at a potential short squeeze. It worked once with GameStop, so why not again? But sometimes, reality kicks them in the teeth.
At the start of this month, Bed Bath and Beyond missed an interest payment, a clear sign of their declining financial health. This was confirmed by the Wall Street Journal, although naturally the users of r/BBBY distrust large institutions. Some of them emailed Bed Bath and Beyond themselves to find the truth, and to no surprise the WSJ was proven right. The company had indeed missed their interest payments. This subreddit, whose information bubble is so tight it could suffocate you, reacted with unbelievable aggression towards, I need to emphasize, this completely factual piece of information. Instead of recognizing that the company is doing poorly, they instead started doubting the loyalty of these people who contacted Bed Bath and Beyond (many of whom were long-time posters). User u/ApeOfDiamondz argued, "If you don’t think people have posted here to get upvotes and become popular/trusted by the community, only to turn around and throw out massive FUD campaigns at the same time, you’re delusional." So they're having a pretty good day. FUD here refers to "Fear, Uncertainty, and Doubt," three things entirely antithetical to their worldview. Their entire financial future revolves around the baseless hype that their meme stock will "Go to the Moon" and vindicate all of the time and money they've sunk into this fantasy. So even the smallest quantity of FUD is completely unacceptable.
In fact, these redditors use enough mantras and in-group slang to make L. Ron Hubbard proud. Some of their favorites include "HODL" (Hold On for Dear Life), their constant reassurance to one another; "Diamond Hands," referring to an investor with unflinching revolve and high risk tolerance; "MOASS" (Mother Of All Short Squeezes); "Ape," a term of camaraderie (referring to the line "apes together strong" from Rise of the Planet of the Apes); and as if they couldn't get more childish, "tendies" is their term for money or assets (coming from a common 4Chan term for chicken tenders). It's very cultish, and when you hear these people communicating in their code-speak it's hard not to feel like that most of them just really need a group of friends.
Even if a short squeeze ends up happening, it won't change the fact that these people are living in a different information reality. They will come up with absurd conspiracy theories to ignore the very clear reality that BBBY might not actually go to the moon, and that their investment strategy is probably a terrible idea. It's even harder for them to accept this reality when they're part of a community that constantly reassures one another, "WAGMI" (We're All Gonna Make it). Plus, based on how frequently some of these users post to r/BBBY I really think they just enjoy belonging to a community. When your identity revolves around the terrible decision to invest in a meme stock, you're obviously gonna HODL like a good Diamond Hands because acknowledging the alternative is unthinkable.
This are extremely similar to crypto-trading communities (in fact, almost all of their slang comes from crypto spaces). Much like crypto, the issue with this community is that they seem to understand the fundamental unfairness of our financial system. They understand the perverse incentives of capitalism, and they observe how corporate executives and hedge fund managers reap immense profits by exploiting the markets. Their problem isn't that this is an unfair system — their issue is that they're not the ones who get to profit off that unfairness. To quote YouTuber Dan Olson, their only problem with capitalism is that "it doesn't provide enough opportunities to be the boot." They're trying to play the exact same game as the big-money Wall Street-types they despise, they're all just really dumb and bad at it.