How to Buy Bed Bath & Beyond (BBBY) Stock

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Contributor, Benzinga
June 3, 2021
Vol / Avg.- / -Mkt Cap-
Day Range- - -52 Wk Range- - -

Bed Bath & Beyond Inc. found itself the lucky ticket winner of the Reddit message board “WallStreetBets.” This led momentum traders to create a blaze for heavily shorted stocks in hopes of stirring up a short squeeze phenom to drive stock prices higher.

Want to get in on the frenzy? Here’s how.

Buying Bed Bath & Beyond is the same process if you’re an experienced stock trader. If this is your first time investing, we’ll teach you how to invest in BBBY in just a few steps.

How to Buy Bed Bath & Beyond

  1. Determine the type of brokerage account you need. 

    What type of brokerage do you prefer, and what’s best for you now and as you grow? If you want to dabble in trading, you might want a brokerage that offers the basics and a lot of hand-holding. 

    If you want to become an active trader someday, you might want comprehensive analysis tools, research and data offerings and even discounts for high-volume traders.

  2. Compare the costs and incentives.

    Most major discount brokers offer commission-free trading. Even so, it’s important to know an online brokerage firm's full pricing schedule, particularly if you plan on trading anything other than BBBY stock. Many brokers charge a commission for other types of trading, like forex, options and more.

  3. Investigate the whole package.

    It’s a good idea to look into what a particular broker can do for you, whether you can tap into research access and third-party integrations, fractional shares, excellent trading platforms, paper trading opportunities and more. You may also want one-on-one investment advice. Spend time on each website or call to discuss what a broker can offer you — in person.

  4. Choose your brokerage. 

    Choosing a brokerage is a personal decision. You may go for a state-of-the-art platform, vibrant educational offerings or go for lowest cost before anything else. Once you gather all the information you need and weigh the pros and cons, decide which broker is right for you. 

  5. Click on “account application.”

    Most online brokers make the process quick and easy to sign up for an account. Get ready to hand over some information, such as your Social Security number and driver's license number. Let’s say you’re interested in tapping into more investment opportunities than BBBY — such as margin options trading. Your broker needs more information in that case — about your net worth, your job, assets to invest and your specific investment goals.

  6. Move money into your account.

    Finally, you can move money into your account with an electronic funds transfer, wire transfer, check or asset transfer. Your fastest option is through electronic funds transfer in most cases.

    Go through the next steps to buy BBBY from start to finish.

  7. Decide How Many Shares You Want

    Once you’ve opened your brokerage account, your next step is to decide how many shares you’d like to purchase.

    1. Take a look at the current share price of BBBY stock and the amount you’d like to invest. 
    2. Next, divide the amount of money you want to invest by its current share price — but round down to the nearest whole number if you can only buy full shares. 
    3. Your broker may allow you to invest in fractional shares, and in that case, your cost will be exactly the amount you divide by the current share price.

    There’s no magic number that indicates how many shares you should buy, but keep in mind that the more shares you buy, the less you’ll spend on commission. However, you must balance that with your risk tolerance and the amount you’re willing to lose — just in case the stock plunges.

  8. Choose Your Order Type

    Next, you’ll choose your order type. Your order type tells your broker when you want your order to be executed, the price that you want to pay for each share of stock and more. You get more control over your order when you choose your order type. You may want to choose any one of these as you place your order.

    Bid: The bid price refers to the highest price that a buyer is willing to pay for a single share of any stock. It’s important to know that the bid price isn’t an order type. However, a buy can happen when the seller finds the bid agreeable or the buyer adjusts the bid to match the ask price of the stock. 
    Ask: The ask price, or ask, is the lowest amount of money a seller is willing to sell shares. For example, let’s say Bed Bath & Beyond is priced at $43. You can set the ask price for $44. As soon as the market price of BBB rises to $44, your order automatically gets executed.
    Spread: The spread is the difference between the bid and ask price. Here’s an example of how it works: Let’s say the bid price for BBBY stock is $43 and the ask price for BBBY stock is $44, then the bid-ask spread for BBBY stock is $1. Stocks with high liquidity have abundant buyers and sellers on the market. As a result, the spread tends to get tighter. Similarly, stocks with low liquidity have fewer buyers and sellers on the market. Hence, the spread tends to get broader. In such cases, you might find it a challenge to trade stocks at your preferred price.
    Limit Order: A limit order is an order to buy or sell a stock at a specific price or better. Let’s say you set your limit order for BBBY at $43. A buy limit order will only execute at $43 or lower and a sell limit order will only execute at $43 or higher. 
    Market Order: A market order is an order to buy or sell a security right away. A market order guarantees an executed order but does not guarantee the execution price. A market usually executes at or near the current bid or ask price.
    Stop-Loss Order: A stop-loss order tells your broker that you want to sell if BBBY stock falls to a certain price. Let’s say you buy 10 shares of BBBY stock at an average price of $45 a share. You might set a stop-loss order at $43, so if BBBY falls to $43, your broker will sell your shares. Stop-loss orders help you prevent excessive loss.
    Stop-Limit Order: A stop-limit order combines 2 types of orders: a stop order and a limit order. You can use a stop-limit order when you set a stop price and triggers a limit order. Next, the limit order executes at your limit price or better. You may want to use a stop-limit order to limit a loss or protect a profit, just in case the stock moves in the direction you don’t want it to go.

  9. Execute Your Trade

    It’s time to buy BBBY (or other stocks you might want to buy, such as stocks under $20, stocks under $10 or even stocks under $5. Hit “buy” after you’ve chosen your order type and you’ll have bought BBBY. Congrats!

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BBBY Stock History

Bed Bath & Beyond was founded in 1971 and initially only sold items for the bedroom and bathroom. By 1985, it had expanded to 17 stores in New York, New Jersey, Connecticut and California. Bed Bath & Beyond sells just 20% from its digital sales. A few more facts: 

  • In 1991, Bed Bath and Beyond’s sales reached $134 million and following that year, the firm went public. 
  • By 1994, Bed Bath and Beyond added electronics to the store's product offerings.
  • In 1999, sales exceeded $1 billion and by 2000, the firm grew to 311 stores in 43 states.
  • BBBY's revenues declined from $12.3 billion in 2017 to $11.2 billion in 2019, due to a decline in consumer demand for purchases at brick-and-mortar stores. 
  • Stock declined 49% from around $22 in 2017 just over $11 in 2018.
  • BBBY stock underperformed between fiscal 2017 and 2020. The home goods retailer’s revenues declined 25% in 2020.

Bed Bath & Beyond wants to close 63 stores by the end of its fiscal year in February 2021 and will shoot for closure of 200 stores over the course of the next two years.

Pros to Buying BBBY Stock

You can make some short-term gains on BBBY stock — the stock price has made huge gains over the last week. Some pros to buying BBBY stock:

  • You could make some short-term gains as volume has increased along with the price, a positive technical sign.
  • Valuation metrics show that Bed Bath & Beyond Inc. may be fairly valued.

Cons to Buying BBBY Stock

On the other side of the coin, a few cons to buying BBBY stock:

  • Two separate Wall Street banks downgraded the stock, so risk is there, even if momentum traders haven’t seen the downsides quite yet.
  • Experts predict a sharp drop coming soon.

As always, exercise caution and only invest with funds you can’t afford to lose.

You Can Buy BBBY Stock Now

Bed Bath and Beyond’s CEO has made moves to accelerate its buyback program, but the company is set to eliminate stores and has a history of underperformance. Your level of risk goes up compared to investing in a more diversified fund. Never invest more than you can afford to lose and stick to limit losses in case BBBY’s tides turn.