Bed Bath & Beyond’s stock continued its roller-coaster ride on Monday, falling 15% amid a broader selloff in meme stocks and concerns about the company’s future.
Shares of the troubled retailer, which has been wrestling with inventory struggles and dwindling sales, skyrocketed recently, driven by the Wall Street Bets crowd on Reddit. The company’s stock, which has fallen 35.7% this year, has risen 85.9% in the last month.
Shares of fellow meme stock GameStop Corp. GME, -5.45% are down 5.2% Monday, while AMC Entertainment Holdings Inc. AMC, -5.51% is down 5.9% after pulling back from a selloff earlier in the day. Weber Inc. WEBR, -6.44% is down 5.8%.
The S&P 500 Index SPX, -2.14%, which is down 2.2% Monday, has declined 13.2% in 2022 and gained 4.3% in the past month.
Bed Bath & Beyond Inc. BBBY, -16.23% is having an eventful few weeks. A filing with the Securities and Exchange Commission made public last week showed that investor Ryan Cohen planned to unload his large stake in the home-goods retailer. Then an SEC filing made public after markets closed Thursday showed that Cohen’s RC Ventures had sold its entire stake in the troubled retailer, sending its shares plunging.
“The outlook for BBBY is worsening, with the potential for a significant restructuring,” wrote Wedbush analyst Seth Basham, in a note released on Monday.
Cash also remains a worry. “If the company does not secure adequate financing to appease its vendor base, it might have not appropriate inventory for the key holiday period, leading to a fast downward spiral and creating bankruptcy risk,” he added. “Even so, we expect cash burn to remain high over the next two quarters until inventory becomes a source of cash in F4Q.”
“Bed Bath & Beyond appears to be a horror story,” Wes Gottesman, market adviser at TradeZing, told MarketWatch, pointing to Cohen’s move and the recent ouster of CEO Mark Tritton. “Bed Bath & Beyond hired and fired CEO Mark Tritton in the span of 3 years, which goes to show that leadership has been notably poor.”
“Consumers prefer to shop at Target, a leading competitor, over Bed Bath & Beyond,” Gottesman added. “Overall, it is a poorly run business with a struggling balance sheet.”
Of 18 analysts surveyed by FactSet, five have a hold rating and 13 have an underweight or sell rating.