Shares of Bed Bath & Beyond rose more than 70% on Tuesday as retail investors on social media flocked to the stock after a filing revealed that activist investor Ryan Cohen was holding his bet steady.
According to Reuters, the stock rose as much as 78.8% per share during the Tuesday session to $28.60 and trading was halted multiple times due to volatility.
The trade flow boosted the share price by 440% last month.
this short jam trigger filing Ryan Cohen’s investment fund, RC Ventures, has maintained its stake in Bed Bath & Beyond, and continues its bet that the price of its shares in the homeware retailer will rise to $80.
Cohen, founder of online pet products retailer chewable and its head Game Pauseacquired a 10% stake in Bed Bath & Beyond in March this year, and also received a call option on 1.67 million shares at a strike price of $60 to $80 expiring in January 2023.
Call options are financial contracts that allow an investor to buy shares at a specific price and time, meaning Cohen is betting that Bed Bath & Beyond stock will rise to $80 early next year.
The stock is currently priced at $26.88 at 06:30 ET in premarket trading.
Who is Ryan Cohen?
Cohen is a Canadian billionaire activist investor who became a star in the retail investment meme stock community after announcing a 10% stake in GameStop in August 2020, making him the company’s largest investor. He joined GameStop’s board of directors in January 2021, which in part triggered the infamous January meme stock rally.
“You see your name [Cohen] correlates and removes the buzz. At the moment, social media buzz is flying around Bed Bath & Beyond and is spreading to other stocks as well,” Dennis Dick, a retail trader at Triple D Trading, told Reuters.
Trading began as soon as the markets opened, and by 2:30 p.m. 300 million shares of Bed Bath & Beyond had changed hands.
The short-term jam also spread to other meme stocks, including dinnerware company Blue Apron, barbecue grill maker Weber, and sports streaming site FuboTV, all rising between 15% and 53%. GameStop, the other company in Cohen’s RC Ventures, also rose 5%.
There were some big hedge fund losers. Asset management firm FMR sold 99.99% of its stake in Bed Bath & Beyond in August. 11 before the stock price rose.
A merchant on Reddit claims to have removed it and a $27,000 loan to enter shares of Bed Bath & Beyond in August nine days ago. 8—one bet could make him $20,000hadn’t he withdrawn his investment two days later when the stock fell?
The short-lived contraction in Bed Bath & Beyond shares mirrored what happened in January 2021 when retail traders raised the company’s price to $53.90. The brief drop in January was triggered primarily by users of subreddit r/wallstreetbets, an internet forum on the social news site Reddit.
Despite the stock rally and the promise of triple the share price, the interior of Bed Bath & Beyond looks bleak. The second half of the last decade has seen troubling revenues and gains, and its shares fell from $80 in 2014 to $4 at the start of the pandemic.
After the brief contraction in January 2021 and Cohen’s acquisition of the company in March 2022, there was a move to transform the company’s business model and narrow its focus.
“We believe Bed Bath needs to narrow its focus to strengthen operations and maintain the right mix of inventory to meet demand while simultaneously exploring strategic alternatives that include segregation. [subsidiary] Buy Baby, Inc and sell the Company in full,” Cohen wrote in a letter to the company’s board of directors in March.
in the company Last quarter earnings report in 2022, Bed Bath & Beyond saw same-store sales drop 24% and revenue to $1.46 billion. The company also said it was drowning in $3.28 billion in debt while only $107 million in cash on its balance sheet.
Neil Saunders, managing director of GlobalData, said after Bed Bath & Beyond’s latest earnings report on June 29, interim CEO Sue Gove took over “a hot mess”.
“The problem is that the company is in a terrible place right now. Saunders needs to improve its turnaround strategy from a very weak financial position and at a time when the home furnishings market is stagnant,” Saunders writes.
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