Bed Bath & Beyond, a US home goods retailer, has filed for Chapter 11 bankruptcy after failing to raise enough money to stay afloat. The former meme-stock had been warning of a potential bankruptcy since early January, and its shares closed at $0.29 on Friday, giving it a market value of $136.9m. That’s down from $17 billion at BBBY’s height in 2013. Following the news, shares are trading more than 20% lower this morning.
Its 360 Bed Bath & Beyond stores, and 120 Buybuy Baby locations will remain open for now, but it has filed motions asking permission to auction the two brands. This means we could see these brands survive in some form if another entity purchases them.
As of late November, Bed Bath had about $4.4bn in assets and $5.2bn in debts, court filings show. It has between 25,001 and 50,000 total creditors and employs about 14,000 non-seasonal workers, court filings say.
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BBBY: Meme Stock Rise & Fall
Bed Bath & Beyond has experienced a chaotic journey over the past two years, culminating in its current perilous position on the brink of bankruptcy.
The company’s stock has fallen almost 97% from its peak two years ago during the meme-stock craze, and by about 91% since early 2021. Among the factors contributing to the fall in the company’s fortunes are mounting debt, high-interest rates, pandemic-induced inventory challenges, and a lack of overall support. Unfortunately, it wasn’t just these issues that led to BBBY’s downfall.
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As Bed Bath & Beyond became a surprise-meme stock due to its highly shorted status, it took on multiple attempts to rescue itself. It launched three new brands. It kickstarted a “rejuvenation plan” and initiated significant stock buybacks. Most notably, GameStop’s chairman and fan of the meme crowd Ryan Cohen dove headfirst into trying to fix the company… or so he said. Conspiracies surrounded Cohen and his $150M stake. While he said he would help the company, Cohen allegedly participated in a stock manipulation scheme with former BBBY CFO Gustav Arnal.
We wrote this last year. It remains true today.
Allegedly, Cohen approached Gustavo Arnal in March of 2022 regarding a mutually beneficial plan to coordinate the sale of their respective shares. Later on, in the midst of a BBBY meme stock rally largely driven by Cohen’s public sentiment, the two allegedly sold their positions in BBBY near the very top of the stock’s most recent performance – what would turn out to be BBBY’s 52 week high. Many considered this an alleged pump and dump.
In short, Bed Bath & Beyond’s turbulent ride has been punctuated by various unexpected twists and turns, including a meme-stock mania, the launch of three new brands, a rejuvenation campaign, a significant share buyback plan, GameStop’s chairman Ryan Cohen’s $150 million stake in the company, and store closures and mass layoffs. Now, the brands are up for auction, the stock is nearly worthless, and once again, retail traders who believed in the company have been left holding the bag.