Update: August 19, 2022: Ryan Cohen’s firm RC Ventures has sold his entire 11.8% stake in Bed Bath & Beyond, it was revealed late Thursday. The news has pushed the already-falling BBBY stock further down. The stock lost 40% in the pre-market session on Friday, after closing 19.6% lower on Thursday and 18% down in after-hours trading on Wednesday.
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Shares of domestic merchandise retail store chain Bed Bath & Beyond Inc. (NASDAQ: BBBY) lost 18% in after-hours trading on Wednesday following the release of the news that activist investor Ryan Cohen was planning to sell his stake in the company. Cohen is also the chairman of GameStop, which is widely considered to be another meme stock.
The downtrend continued and the stock slipped again in the pre-market session on Thursday.
According to an SEC filing released on Wednesday, Cohen has proposed to sell up to 7.78 million shares and call options on another 1.67 million shares through his firm RC Ventures. The value of Cohen’s stake in Bed Bath & Beyond stood at around $148.5 million on Monday.
The strike price of the options held by the billionaire investor ranged from $60 to $80, which is significantly higher than Monday’s closing price of $16.
What Type of Company Is Bed Bath and Beyond?
New Jersey-based Bed Bath and Beyond is an omnichannel retailer that offers domestic merchandise and home furnishing products. The company runs stores in Mexico, Canada, the U.S., and Puerto Rico. Its brands include Cost Plus, BABY, buybuy BABY, Harmon Face Values, Christmas Tree Shops, and Bed Bath and Beyond.
Is BBBY a Good Investment?
Analysts on TipRanks do not consider BBBY stock a good investment. In fact, they have a Strong Sell rating on the stock, which is based on two Holds and 11 Sells. Bed Bath and Beyond’s average price target of $3.84 implies 83.4% downside potential.
The Strong Sell rating is the result of rating downgrades by three analysts recently. These analysts include Susan Anderson of B. Riley Financial, Justin Kleber of Robert W. Baird, and Alex Arnold of Odeon Capital Group LLC.
Anderson and Arnold have a price target of $5 (78.3% downside potential) and $7.5 (67.5% downside potential), respectively, on BBBY stock.
Commenting on the stock’s recent price volatility, Anderson said, “We believe that current valuation is unwarranted and remain on the sidelines as Bed Bath is facing fundamental issues with its business including declining liquidity and concern around the upcoming August 2024 $300 million note with approximately $285 million left to repay.”
Meanwhile, bloggers and hedge funds have a Neutral stance on the home-goods retailer.
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