Shares of Bed Bath & Beyond fell more than 40 percent in pre-market trading Friday after Ryan Cohen, one of the company’s largest shareholders, sold his entire stake in the homeware store.
RC Ventures, Cohen’s investment vehicle, sold 9.45 million Bed Bath & Beyond shares — nearly 12 percent of the company — between a range of $18.68 and $29.21 on Tuesday and Wednesday, according to securities filings Thursday afternoon. It also sold call options on the stock.
The sale resulted in a windfall for Cohen, who bought his Bed Bath & Beyond shares about five months ago for an average price of $15.34.
Cohen indicated he plans to exit his position after markets closed on Wednesday. As a result, the Bed Bath & Beyond share fell 19.6 percent during normal trading hours on Thursday. They fell nearly 46 percent after hours to a low of $10.12. During Friday’s pre-market trading, shares hovered around $10.60, or down about 43 percent.
The sharp drop in the company’s stock price follows weeks of frenzied trading in the struggling homeware store, recalling the stock meme that gripped markets during the coronavirus pandemic.
Between the end of June and the end of regular trading on Wednesday, the company’s stock price was up more than 300 percent — a staggering increase for a retailer that is dangerously short on cash.
An earlier revelation on Monday by Cohen, who is also the co-founder of pet food chain Chewy, sent the stock sharply higher on Tuesday. He revealed that he had bought a large number of call options in Bed Bath & Beyond – derivatives that can provide a windfall as a stock rises in value.
Bed Bath & Beyond said Thursday it is “working quickly” with outside financial advisors to strengthen its balance sheet. The company’s most recent quarterly results showed the heavily indebted retailer had $108 million in cash, compared to $1.1 billion in the same quarter a year earlier.
Cohen shook up Bed Bath & Beyond before leaving office, adding three independent board members and pushing for the sale of his baby brand, which didn’t happen.
Bed Bath & Beyond is the second meme stock Cohen has focused on. He started investing in GameStop through RC in 2020 and eventually amassed a 12.9 percent stake.
In January, he was appointed to the video game retailer’s board, followed by a 1,500 percent price increase in two weeks. Cohen has overseen a C-suite and board makeover at GameStop, where he became its chairman in June.
Cohen isn’t the only Bed Bath & Beyond investor generating big profits from trading the stock. On Wednesday, the Financial Times revealed that a 20-year-old shareholder still in college has made about $110 million in profit from selling his stake.