Retail darling Bed Bath & Beyond extends rally ahead of strategic update

© Reuters. FILE PHOTO: A customer walks into a Bed Bath & Beyond store in Novi, Michigan, U.S., January 29, 2021. REUTERS/Emily Elconin/File Photo

(Reuters) - Bed Bath & Beyond Inc (NASDAQ:BBBY)'s shares looked set to extend their rally on Tuesday ahead of a strategy update from the struggling retailer this week that has sparked hopes of the company nearing a funding deal of about $400 million.

Its shares climbed 9.2% in premarket trading, adding to about 30% rise in the past two sessions since the company reiterated it would hold a conference call to provide a business and strategic update on Aug. 31.

Reuters, citing a source, reported last week that Bed Bath & Beyond was nearing final terms with investment firm Sixth Street that would provide a loan of nearly $370 million.

"Investors are optimistic that it could be set to announce a $400 million loan deal," Victoria Scholar, head of investment at Interactive Investor, said on Tuesday. "The fundamentals of the business remain rocky but its Reddit army of bulls have upheld its share price."

Bed Bath & Beyond had long-term debt totaling $1.38 billion and only $107.5 million in cash as of May end.

Morgan Stanley (NYSE:MS) in a note to clients said on Sunday one of the most important items of the update is the magnitude of potential financing Bed Bath & Beyond has secured, as well as support from its vendors.

Bed Bath & Beyond is the most ordered stock by individual investors, according to Fidelity Research.

The "meme" stock is on track for its best month since its debut in 1992, having risen about 165% in August after a rally and u-turn triggered by billionaire Ryan Cohen's sale of his 9.8% stake almost five months after amassing it and pushing for changes.

"The company is showing little sign of shedding its meme stock skin despite the rollercoaster ride shares have been on in the past month," said Susannah Streeter, senior markets analyst at Hargreaves Lansdown.