Ryan Cohen’s $60 million Bed Bath u-turn triggers meme stock investor ire

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An exterior view shows a Bed Bath & Beyond store in Novi, Michigan, US, Jan. 29, 2021. REUTERS/Emily Elconin

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Aug 19 (Reuters) – Investors flooded social media platforms like Reddit on Friday criticizing Ryan Cohen’s sale of his stake in Bed Bath & Beyond Inc (BBBY.O), blaming him for helping fuel a meme- stock rally to then walk away with a profit of $60 million.

The billionaire investor announced on Thursday that he had sold his 9.8% stake in the struggling household goods retailer, nearly five months after amassing it and pushing for changes. In response, the company fired its chief executive, changed a number of board members and agreed to investigate divestment of the baby products division. read more

Cohen is poised to earn a pre-tax profit of between $55 million and $60 million on the stock sale, according to a Reuters review of regulatory filings and a person familiar with the matter.

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Cohen gave no reason for the turnaround and did not respond to requests for comment. He built a following of loyal individual investors last year who bet on his turnaround from video game retailer GameStop Corp (GME.N), some of whom expressed anger and disbelief after following his lead on Bed Bath to see him cash out abruptly.

Cohen sold his Bed Bath shares on Tuesday and Wednesday after it surged 300% in August amid a speculative rally in meme stocks, a popular reference to stocks traded by investors mainly on the basis of social media hype in rather than their economic foundations.

Bed Bath & Beyond shares, which briefly touched $30 this month, ended Thursday at $18.55 and fell 20% after filings revealed Cohen was planning to sell his shares. It plunged another 44% in after-hours trading after filings revealed that it had sold all of its shares. read more

The stock was on track to open 43% lower Friday, wiping out all of the week’s gains.

“The writing is on the wall that Bed Bath & Beyond stock has once again been disconnected from economic reality,” said Wells Fargo analyst Zachary Fadem.

Ryan Bennett, a 43-year-old farmer in Beloit, Wisconsin, told Reuters he lost more than $40,000 because he followed Cohen in buying Bed Bath stock.

“I feel like I took my hard-earned money out of my pocket and put it in Cohen’s,” Bennett said.

Bed Bath said in a regulatory filing Thursday that it is working with outside financial advisors and lenders to strengthen its balance sheet, a recognition it must raise capital to keep afloat. The company had a mountain of long-term debt totaling $1.38 billion and just $107.5 million in cash at the end of May, according to its most recent financial disclosure.

Investors’ response raises questions about whether Cohen will continue to exert strong influence over meme stock loyalists. On Wallstreetbets, the Reddit forum frequented by such investors, some complained about their losses and Cohen’s role.

“After reading what Ryan Cohen has just done, I hope you all understand that he is not one of us,” wrote one of the posters named Ronpm111.

Shares of GameStop, in which Ryan has a 12% stake and serves as chairman, have fallen 20% since announcing his share sale in Bed Bath. This raised questions among many investors, including Bennett, about whether Cohen’s stock sale at Bed Bath will weigh on GameStop’s status as a meme stock.

“I don’t know if I can trust that he has a stake in GameStop. I’ll probably try to get out of that,” Bennett said.

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Reporting by Krystal Hu and Angelique Chen in New York and Svea Hebst-Bayliss in Rhode Island; Additional reporting by Deborah Sophia in Bengaluru; Editing by Greg Roumeliotis and Jacqueline Wong

Our Standards: The Thomson Reuters Trust Principles.

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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