Will BBBY Stock Go Private After Ryan Cohen's Stock Sell-Off?

Bed Bath & Beyond Inc. (BBBY) stock hit a major slump after weeks of skyrocketing capitalization. The move comes as major investor Ryan Cohen sells his stake and the company discusses a potential restructuring.

Will the downfall be enough to take Bed Bath & Beyond private, or will BBBY stock recover in the long run?

BBBY stock fell -38.44 percent so far today on Friday, August 19, contributing to a near 50-percent fall over the last two days.

In the three weeks leading up to this, shares for Bed Bath & Beyond steadily climbed, gaining more than 400 percent in the process to a peak of $23.08 (still lower than the company’s YTD peak of $27.23 in late March).

As a lasting member of the meme stock cauldron, BBBY stock has maintained intermittent spurts of inflows and subsequent steep outflows over the last year. Unlike previous runs, dependent largely on sentiment and investor Ryan Cohen’s stake rather than fundamentals, the latest bearish period depends more on Cohen’s egress and a mysterious future.

Cohen has officially sold his entire BBBY stake. As GameStop chairman, Cohen’s place in the meme stock niche is strong. When he divests, it suggests to many investors a grim company outlook.

When Cohen purchased seven million BBBY shares and call options in early 2022, investors piled into the stock. Because Cohen bought in at a cost basis of $15.34 per share, he ended up profiting about $59 million. Cohen bought into BBBY as an activist investor seeking to improve the company’s performance.

At the time of his initial stock purchase, Cohen wrote, “Almost two-and-a-half years into Mr. Tritton's tenure, Bed Bath has underperformed the S&P Retail Select Industry Index by more than 58 [percent] on an absolute basis and is looking at an approximately 29 [percent] decline in full-year sales from pre-pandemic levels.”

Cohen may have gotten out just in time, but many retail investors who follow his moves did not achieve the same fate. Individual investors lost about $205 million in the downswing.

As for Bed Bath & Beyond’s outlook, Telsey Advisory Group told reporters, “Overall, Bed Bath’s weak financial position, uncertain economic environment, leadership overhaul, poor execution, and lack of clear strategy keep us cautious on the stock.”

Telsey goes so far as to forecast the BBBY stock price to land at just $3 per share. For reference, the current price is $11.51 as of mid-afternoon on August 19.

Bed Bath & Beyond reportedly recently hired a law firm that specializes in restructuring corporations. The company is already in talks with financial advisors and lenders.

Whether it’s headed into bankruptcy or some other sort of restructuring remains up in the air. One potential option for the company would be to go from public to private. With less pressure on maintaining public shareholder value, the company could stand a better chance at recuperating its losses and moving forward toward growth.

In early July, experts shared Bed Bath & Beyond’s debt problem, and that debt restructuring alone may not be enough to fix it.