US student makes $110m profit trading meme stock Bed Bath & Beyond
A 20-year-old US university student has made a $110m (£91m) profit with a one-month bet on the meme stock Bed Bath & Beyond.
Jake Freeman and his family bought almost 5m shares in the struggling US homeware retailer at less than $5.50 a share in July for a total outlay of about $25m.
After an almost 500% increase in the shares, sparked by intense chatter about the stock on Reddit message boards, including several posts by Freeman, he sold them for more than $130m – crystallising the vast profit.
They rose as high as $28 on Tuesday, when Freeman is understood to have sold most of his stake. The Bed Bath & Beyond shares, which trade on the ticker BBBY, dropped to $23 on Wednesday, and were down a further 14% in pre-market trading on Thursday to $19.70.
Meme stocks are those that soar independently of the success of a business, thanks to hype on message boards and social media. They rose to prominence early last year when shares in ailing companies such as the US retail firm GameStop soared, partly driven by a campaign to punish hedge funds betting that their value would fall.
Although those shares eventually slid back down, the meme stock trend has had a revival this summer, with BBBY shares leading the charge.
Freeman, an applied mathematics and economics student at the University of Southern California, said he had been “shocked” at the speed of the surge in the stock.
“I certainly did not expect such a vicious rally upwards,” Freeman told the Financial Times in an interview. “I thought this was going to be a six-months-plus play … I was really shocked that it went up so fast.”
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