Most knew that Bed Bath & Beyond (NASDAQ:BBBY) was in trouble already. The store closures make that clear, as do all the reports of missed payments to vendors. Now the whispers turn to bankruptcy…unless the beleaguered retailer can successfully pull off an “at-the-market” offering of potentially $300 million in shares. Given that investors already sold off sufficiently to drive share prices down around 24% in Thursday’s trading, that may be a taller order than management hopes.
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While selling shares to investors may be a long shot—especially given that investors have been selling frantically—Bed Bath & Beyond isn’t going down without a fight. It’s already set up a stock purchase agreement with B. Riley Principal Capital II to land capital. Further, it’s cut off all previous equity offerings and any additional warrants for Series A Convertible Preferred Stock.
All this, however, is vital to Bed Bath & Beyond’s future. Without successful stock offerings and fresh capital, it will likely file for bankruptcy protection, noted the company. This bet-the-company stock play comes just about two months after it brought out a plan to pull in $1 billion. Reports noted that it only got about $225 million, enough to cover some of its outstanding debt. Now, with share prices under $1, the idea of selling that much stock seems like a long shot at best.
Analysts aren’t having it, either. Analyst consensus is unanimous with six Sell recommendations, enough to make Bed Bath & Beyond stock a Strong Sell. For those brave enough to try, though, Bed Bath & Beyond’s average price target of $0.97 per share gives it 58.55% upside potential.
