Bed Bath Beyond stock rises after GameStop chairman files for sale

The shares of Bed Bath Beyond Inc. went up late in the session from a 45% surge earlier in the day after GameStop chairman Ryan Cohen filed for a proposed sale of his stake in the home goods retailer.

After the bell, the shares fell by more than 15% as Cohen's venture capital firm RC Ventures said it intends to sell 9.45 million shares, including options, through JP Morgan Securities.

The company did not respond immediately to a request for a comment, while RC Ventures could not be reached.

The firm bought call options expiring in January 2023 on 1.67 million shares with a strike price ranging from $60 to $80 even as Bed Bath Beyond struggles with declining revenue and liquidity concerns.

Individual investors dabbling in highly shorted shares bought $73.2 million worth of shares in the previous session because of Cohen's bets that led to the highest single-day purchase of the company's shares in at least five years.

On Wednesday, Bed Bath Beyond was the most actively traded single stock option, far ahead of popular options trades like Apple and Tesla Inc., according to Options Clearing Corp.

The resurgence in retail trading comes after a rebound in U.S. stocks that helped the S&P 500 recoup half of its losses since its June low.

In 14 out of the last 15 sessions, Bed Bath Beyond has helped the company's market value increase fourfold to more than $2 billion. The shares went up to $30 and closed down at $23.08.

Jake Dollarhide, Chief Executive at Longbow Asset Management in Tulsa, Oklahoma, said that it is a quality company, but shares are probably overvalued in the low teens and are ridiculously overvalued at high $20 s.

In June and July, the stock had lost 60% of its value. In the last 30 days, Bed Bath Beyond's free float has been shorted by 55%, an increase of 19%, according to S 3 Partners.

There is a chance that the meme rally will spread since there is a lot of short-term capital entering the market. Over the past few weeks, we've seen the same with Chinese meme stocks, said Siddharth Singhai, chief investment officer at New York-based hedge fund Ironhold Capital.