Bed Bath & Beyond shares jump as much as 78.8% after Ryan Cohen’s latest bet

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Shares in Bed Bath & Beyond rose more than 70% on Tuesday as private investors flocked to the stock on social media after a filing revealed activist investor Ryan Cohen is holding his bet.

The stock rose a whopping 78.8% to $28.60 a share during Tuesday’s session, according to Reuters, with trading halted several times due to volatility.

Due to the influx of trade, the share price rose by 440% in the past month.

The filing that triggered the short squeeze revealed that Ryan Cohen’s investment fund, RC Ventures, had retained its percentage ownership of Bed Bath & Beyond and stuck to its bet that the price of shares in the household goods retailer would rise to $80.

Cohen, the founder of the online pet store Chewy and the chairman of GameStop, bought a 10% stake in Bed Bath & Beyond in March of this year and also took call options on 1.67 million shares with an exercise price ranging from $60. up to $80 expiring. in January 2023.

Call options are financial contracts that allow an investor to buy a stock at a particular price and at a particular time, meaning that Cohen has essentially bet that Bed Bath & Beyond’s stock will rise to $80 early next year.

The stock is currently priced at $26.88 at 6:30 a.m. ET in pre-market 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 in January 2021, which in part kick-started January’s infamous meme stock rally.

“You see his name [Cohen] associated and it gets the buzz going. So right now the social media buzz is circulating around Bed Bath & Beyond and it’s spreading to other stocks as well,” Dennis Dick, a retailer at Triple D Trading, told Reuters.

WallStreetBets moves

Trading began as soon as markets opened and by 2:30 p.m. ET, 300 million shares in Bed Bath & Beyond had changed hands.

The short squeeze also spilled over into other meme stocks, including meal kit company Blue Apron, barbecue grill maker Weber and sports streaming site FuboTV, all of which were up between 15% and 53%. The other company in Cohen’s RC Ventures, GameStop, also rose 5%.

There were some big hedge fund losers. Wealth management firm FMR sold 99.99% of its Bed Bath & Beyond stock on Aug. 11 before its share price skyrocketed.

A trader on Reddit claims he took out a $27,000 loan for Bed Bath & Beyond stock nine days ago on Aug. 8 — a bet that could have netted him $20,000 if he hadn’t pulled his investment two days later when the shares closed. submerged.

The short squeeze in Bed Bath & Beyond stock mirrors what happened in January 2021, when retailers pushed the company’s price to $53.90. The January short squeeze was mainly caused by users of the subreddit r/wallstreetbets, an internet forum on the social news website Reddit.

The classic view

Despite the stock rally and a promise of tripled share price value, Bed Bath & Beyond’s internal outlook looks bleak. It has seen difficult earnings and earnings in the second half of the past decade, and its shares fell from about $80 in 2014 to $4 at the start of the pandemic.

Following the January 2021 short squeeze and Cohen’s acquisition of the company in March 2022, there has been a drive to transform the company’s business model and narrow its focus.

“We believe Bed Bath needs to narrow its focus to strengthen its business and maintain the right inventory mix to meet demand, while exploring strategic alternatives, including separating [subsidiary] buybuy Baby, Inc and a full sale of the company,” Cohen wrote in a letter to the company’s board on March 7.

In the company’s latest quarterly report in 2022, Bed Bath & Beyond saw same-store sales fall by 24% and revenue fell to $1.46 billion. The company also indicated it was drowning in $3.28 billion in debt with only $107 million in cash on its balance sheet.

Neil Saunders, chief executive of GlobalData, said after Bed Bath & Beyond’s most recent earnings report on June 29 that Sue Gove, the interim CEO, is inheriting a “hot mess.”

“The problem is that the company is now in a terrible place. It needs to refine its turnaround strategy from a very weak financial position and at a time when the home furnishings market is in the doldrums,” Saunders writes.

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The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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