Signs mark a Bed Bath & Beyond store in Somerville, Massachusetts.
Brian Snyder | Reuters
Bed Bath & Beyond shares plunged Wednesday during prolonged trading after activist investor Ryan Cohen said in a filing that he plans to sell his entire stake in the retailer through his firm RC Ventures.
According to a Form 144 filed with the Securities and Exchange Commission, RC Ventures proposed to sell 9.45 million shares of the company, which is the total amount it owns in Bed Bath. A Form 144 is an official notification of a proposed sale of securities.
Representatives from RC Ventures and Bed Bath did not immediately respond to CNBC’s request for comment.
The total purchase price of the 7.78 million shares directly owned by RC Ventures is approximately $119.4 million, excluding brokerage commissions, according to previous SEC filings. And the total purchase price of the company’s call options, which can be exercised on 1.67 million shares directly owned by RC Ventures, is approximately $1.8 million, also excluding those commissions.
Call options give a buyer the right, but not the obligation, to buy shares at a specified strike price. Cohen’s options were strike prices of $60, $75 and $80.
If Cohen hypothetically managed to sell all of his Bed Bath common stock at Wednesday’s closing price of $23.08, he would make about $60 million, according to a CNBC calculation.
Cohen first revealed in early March that he had a nearly 10% stake in Bed Bath through his activist firm. FactSet says its holdings stood at 11.82% at the end of March.
At the time, Cohen, the GameStop chairman and founder of Chewy, wrote a letter to then-Bed Bath CEO Mark Tritton saying he believed the household goods chain was struggling to reverse the decline in market share and deal with supply chain issues. He also urged the retailer to consider selling its Buybuy Baby chain.
Later in March, Bed Bath said it had struck a deal with the activist company to add three Cohen-chosen people to its board of directors, effective immediately.
Just three months later, Bed Bath abruptly replaced Tritton as CEO in June and appointed restructuring expert and independent director Sue Gove as his interim successor. This came after the company suffered another quarter of slow sales and heavy losses.
More recently, Bed Bath has struggled with liquidity problems, the treasury drying up before the holidays and during school and school sales periods.
Bed Bath reported approximately $108 million in cash and equivalents in the first fiscal quarter, up from $1.1 billion a year earlier. Net losses totaled $358 million, up from a loss of $51 million in the same period in 2021.
Still, the meme stock craze has found new life in recent weeks, with Bed Bath being the main beneficiary. At the end of Wednesday, the stock was up 58% so far this year, easily outperforming the broader market.
In August alone, the household goods retailer’s shares are up more than 300%, with high trading volume. According to FactSet, nearly 400 million shares were traded on Tuesday and another 249 million shares on Wednesday.
Bed Bath was also by far the most cited stock on Reddit’s Wall Street Bets page for the past week, according to third-party data provider Quiver Quantitative.
On Wednesday, after news of Cohen’s filing began to surface, users took to the Wall Street Bets page to emphasize that Form 144 is only for notifying a proposed sale.
foyerhead “foyerhead” Ryan Cohen has not sold. FORM 144 is the ‘right’ to sell. It does not mean that you are selling or have sold. If you own 10% or more of a business, you must complete the form that gives you the right to sell within the next 90 days.”
User “DeadSol” wrote: “Of course he didn’t sell. He’s a monkey like us.”