With Bed Bath & Beyond, the Fireworks May Just Be Starting After falling over 20% following a poor earnings report and even worse guidance, investors have to wonder what a fair price is for BBBY stock? Until that answer becomes clear,...

Which is the real Bed Bath & Beyond (NASDAQ: BBBY)? Is it the stock that dropped over 20% on September 30 after releasing disappointing earnings and even more discouraging guidance? Is it the stock that at the onset of the pandemic was in penny stock range? Or was it the stock that for most of 2021 has been trading at levels not seen in four years?

I've been skeptical of BBBY stock all year. The reason is simple. On two separate occasions in 2021, retail investors made Bed Bath & Beyond part of the meme stock movement. In February it soared to over $50 a share. Then in June, it went over $40 a share. Even if it wasn't well established that Bed Bath & Beyond was a favorite of the meme stock crowd, it wouldn't be a great leap to figure it out.

However, on two occasions in the last five years, BBBY stock has been trading far lower than it is today. In fact, prior to the pandemic, the stock had been in a steady multi-year decline.

So that takes me back to the question I started with, which stock price reflects the real value of BBBY stock? Until that answer becomes clear, it's best to stay away.

Let the Games Begin

According to one source, institutional ownership for BBBY stock is 82%. And MarketBeat shows that institutional investors did a lot of buying in the second quarter. That leads me to believe that the "smart money" was short selling. I can't prove that. But hedge funds and other investment banks aren't in the business of losing money. So you have to wonder why all those shares were being purchased when there had to be at least some concern that Bed Bath & Beyond was going to put out a stinker of a report.

And it did happen. So what happens next? I've been looking at the chat rooms today and there is some thought that a short squeeze may be in the works. Maybe it will, maybe it won't. What seems clear is that retail investors haven't lost interest in the stock. Which could mean that BBBY stock will have some pep in its step.

Whether it should or not is another story.

What Has Changed?

When I look at the BBBY stock price chart, I'm struck by the fact that after a clunker of an earnings report the company is trading higher tonight than it did for most of 2019 and 2020. And strictly from a technical perspective BBBY stock is looking oversold.

But I'm still going to be skeptical at this point. Based on the company's revenue and earnings alone, I believe the stock should more accurately be valued closer to where it was two years ago. That would put the stock price somewhere in the $10 range.

The analyst community hasn't weighed in yet. But it won't surprise me to see BBBY stock endure multiple downgrades in the next couple of weeks.

But as we've learned in 2021, when you're a meme stock the fundamentals really don't matter. Retail investors have led this rally and its retail investors that will have to pick up the baton now that the stock has fallen from those heights.

I call this recent trend towards moving a stock higher or lower pretty much absent fundamentals the gamification of stocks. I can't say it's ineffective because many traders have made good money. If that fits your risk tolerance, there may be a trade here. But can I say that BBBY stock is a worthy investment? I think it would have to fall much further before I'm willing to take that bet.