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Meme stock Bed Bath & Beyond sinks after investor Cohen's exit

Published Aug 18, 2022 08:07AM ET Updated Aug 18, 2022 06:50PM ET
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© Reuters. A shopping cart is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly/File Photo
 
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(Reuters) -Bed Bath & Beyond Inc shares tumbled 35% after the bell on Thursday as billionaire investor Ryan Cohen exited the struggling home goods retailer by selling his stake following a stunning rally in the meme stock this month.

Cohen's RC Ventures was the second largest investor in the company. The venture capital firm said in a regulatory filing that it has no stake as of Aug. 16.

The billionaire declined to comment on further queries.

The company's shares were down at $12.27 in after-hours trading. After gaining nearly 360% this month, the share price had risen to $30 in the previous session when the rout began after RC Ventures said it aims to sell 9.45 million shares, worth $148.6 million.

It also included the sale of its January call options with strike prices between $60 and $80.

When Cohen's firm first disclosed the bullish bet on Tuesday, it boosted retail investor interest and resulted in record trading in the stock.

Brokerage Wedbush downgraded the stock to "underperform" and reaffirmed its price target of $5, saying the stock looks "disconnected from fundamentals" at the current valuation.

"News that Ryan Cohen may be selling his stake in BBBY appears to have spooked the meme stock faithful," said David Jones, strategist at Capital.com.

"Unlike the frenzy of the past, (retail) traders seem more inclined to follow institutional wisdom than to blindly battle for companies with poor fundamentals."

The retailer had in June ousted its chief executive and reported a slump in sales. It had in March added three directors in an agreement with Cohen, who is also the chairman of GameStop (NYSE:GME).

However, a stock market rebound has rekindled speculative options trading in single stocks among retail investors after volatile markets turned them away from risky bets earlier this year.

So far in August, the sharp run-up in Bed Bath & Beyond (NASDAQ:BBBY) shares had burnt a more than $600-million hole in the pockets of those who had bet against the stock, S3 Partners said on Wednesday.

But short interest has increased to 55% of the company's free float as bearish investors managed to find attractive entry points, the analytics firm said. Its ticker was trending high on investor-focused social media platform, stocktwits.com.

Meme stock Bed Bath & Beyond sinks after investor Cohen's exit
 

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Comments (3)
Jay Bay
Jay Bay Aug 18, 2022 10:28AM ET
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Cohen is just a bigtime pump and dumper. Golden age of fraud...
Peter Andersen
Peter Andersen Aug 18, 2022 10:28AM ET
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Like Elon
Ryan Lennon
Ryan Lennon Aug 18, 2022 10:28AM ET
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he makes money off a pump you guys create, I don't see the issue. don't buy a garbage company because everyone else is hoping on the wagon. learn how to trade.
mike honcho
mike honcho Aug 18, 2022 9:39AM ET
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I'll comment for him. these are blatant lies mixed with unfinished truths. he had to file because his stake reached 11% from 9.5%.he had to file. He does NOT have to sell. he does now have to right to sell some and 1% would be fine all day. we'll buy it back up no problem. we never left. were not leaving ever. he has zero plans to sell his entire stake. lies lies lies.
Benjamin USA
Benjamin USA Aug 18, 2022 9:39AM ET
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Lmao he made his money and got out. That is what investors do, gamblers hope and hold for 100000x meme gains
Ryan Lennon
Ryan Lennon Aug 18, 2022 9:39AM ET
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whatever youre smoking Mike, I want some... GTFO of meme stocks, youre delusional.
mike honcho
mike honcho Aug 18, 2022 9:39AM ET
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I'll comment for him. these are blatant lies mixed with unfinished truths. he had to file because his stake reached 11% from 9.5%.he had to file. He does NOT have to sell. he does now have to right to sell some and 1% would be fine all day. we'll buy it back up no problem. we never left. were not leaving ever. he has zero plans to sell his entire stake. lies lies lies.
Erikke Evans
Erikke Aug 18, 2022 9:39AM ET
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get a grip
Brad Albright
Brad Albright Aug 18, 2022 9:39AM ET
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Load up, then.
Ryan Lennon
Ryan Lennon Aug 18, 2022 9:39AM ET
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no one who knows anything about investing wants this meme stock garbage. Cohen played you all for fools. power to him.
Brad Albright
Brad Albright Aug 18, 2022 9:39AM ET
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