Bed Bath Beyond stock slumps after activist investor calls for sale
Five months after the disclosure of a stake in Bed Bath Beyond Inc. activist shareholder Ryan Cohen wants out, a sell off of shares of the home goods retailer has sparked a selloff.
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The Union, New Jersey-based company slumped as much as 18% to $18.85 in premarket trading Thursday after Cohen s RC Ventures said in a filing with the US Securities and Exchange Commission that it could sell as many as 7.78 million shares of Bed Bath Beyond, along with some call options.
More than 400% of meme stocks went up from a July low as retail traders piled in and pumping their bets on popular social media websites and trader chatrooms. The total net purchases of the stock was $229.1 million on Wednesday after they bought $58.2 million of the stock on Wednesday, a day after they snapped up a record $73.2 million.
Retail traders have been fuelling the surge in Bed Bath Beyond shares, but the company's fundamentals remain dismal. The flailing retailer said in a filing that it has been working with external financial advisers and lenders over the past several weeks to strengthen its balance sheet with plans to provide an update at the end of the month.
Wedbush downgraded the stock to underperform from neutral Thursday, making it the fourth Wall Street bank to recommend clients sell the stock in the past two weeks. All told, 12 analysts hold sell-equivalent ratings, while four rate it at a hold and only one analyst recommends investors buy the stock. The stock is expected to slump almost 80% from Wednesday s closing price due to the average 12 month share price target of $4.75.
Bed Bath Beyond shares have been on a tumultuous ride this year, with the stock going up by most on record in March when RC Ventures revealed a 9.8% stake in the retailer and asked it to consider a sale of the company.
Cohen reached an agreement on the addition of three independent directors to the retailer's board and pushed for the resignation of Chief Executive Officer Mark Tritton. The company announced his ouster in June, just minutes before it released another lackluster earnings report that showed sales fell even more than expected in the first quarter. Cohen said that the company's Buybuy Baby unit was undervalued, but no announcements have been made about the sale of that asset.
Keybanc Capital Markets analyst Bradley Thomas said in a report after the disclosure from RC Ventures that trends at Bed Bath Beyond remain challenged. He has an underweight rating with a price target of $2.
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