Bed Bath & Beyond (BBBY) Stock: All You Need to Know
Aug 22, 2022
Bed Bath and Beyond catapulted to the top of the meme trade last week on the back of massive trading volume and a flurry of news in the “meme” space including the issuance of APE “dividend” for AMC holders. BBBY transaction volume doubled on Friday 8/5 leading into the frenzy, seeing another double on Monday, with the stock price responding similarly on its way to $20. On 8/16, BBBY reached nearly 400 million shares traded on a float of just about 80 million. The day ended at nearly 5x volume to shares outstanding with the stock toping out just under $30, up nearly 600% over the span of just two weeks.
While certainly secondary to GME, the original mother-of-all-squeezes, BBBY has one common denominator – Ryan Cohen. Ryan Cohen was the co-founder of Chewy (CHWY) and is currently an activist investor through his fund RC Ventures, with large stakes in AAPL and most notably, GME and BBBY. Ryan led the charge in GME, buying a large stake in GME in late 2020.
Cohen’s involvement with BBBY is a bit more complex. Through RC Ventures, Cohen purchased stock positions at around $15 per shares totaling around 9.8% of the company stock, along with far out of the money call options. These call options, expiring in January 2023 at the $60, $75, $80 strikes, represented the right to buy shares of BBBY stock at a price many multiples of the stock price even at its $30 price height. These call options helped propel the “gamma” squeeze through massive stock and call volume.
Buy low, sell high! As the stock rallied up to $30 RC Ventures took the opportunity to liquidate the position. RC Ventures liquidated tranches of BBBY stock on its way up, selling out of shares between $18 - $29, and liquidating the far out of the money call options. A massive win for RC Ventures, estimates peg profits on just the stock transactions at around $60 Million with potentially more profit coming from the sale of the out of the money call options.
Many of the meme stocks have felt the pressure of negative headlines, but most will point to the BBBY fundamentals. Bed Bath & Beyond has seen 25% year over year declines in net sales, and posted a $358 million loss for the second quarter ending in June. Heavily debt laden, BBBY bonds trade north of 30%, the market isn’t pricing in much upside for this stock.
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