The Bed Bath & Beyond logo is on display at the Williston, Vermont store on June 19, 2023.
Jakub Porzycki | Nurphoto | Getty Images
Bed bath and beyond stocks continue to trade in massive volumes, even though it seems the wildly popular meme stock is still weeks away from being worthless.
According to data from Nasdaq, more than 15 million transactions took place on August 16 in shares of the stricken home improvement store, which filed for Chapter 11 bankruptcy in late April and began closing its brick-and-mortar stores in recent months after multiple fundraising efforts failed to keep the company afloat.
The intellectual property was acquired at auction by Overstock, which acquired the Bed Bath & Beyond brand and relaunched the company as an online retailer earlier this month. It also plans to take the company’s share price and change the current OSTK to BBBY, hoping to capitalize on the long-standing household name. The physical stores of the original company have been closed and the assets are being liquidated.
In its SEC filing in April, the company warned that trading its stock during the pending Chapter 11 cases was “highly speculative and involved significant risk.”
“Trading prices for the company’s securities may bear little or no relation to the actual recovery, if any, by holders of the company’s securities in the Chapter 11 cases,” said Bed Bath & Beyond.
“The Company expects that holders of common stock of the Company could suffer a significant or total loss on their investment, depending on the outcome of the Chapter 11 Cases.”
In its subsequent bankruptcy plan published July 20, the company affirmed that “upon full and final satisfaction of each permitted interest in BBB, each permitted interest in BBB shall be cancelled, released and extinguished, and no further force or shall have effect. , and no holder of interests in BBB shall be entitled to any recovery or distribution under the Plan in respect of such interests.”
Without a recovery, the company’s market cap of $152.25 million effectively amounts to nothing for common stockholders, who lag behind various levels of bondholders in the repayment food chain and do not get a vote on the plan.
The company’s scheduled confirmation hearing will take place on Sept. 12, but there have been no positive catalysts for the company’s recent stock purchases.
Activist investor and GameStop Chairman Ryan Cohen fueled optimism last year by suggesting that the successful Buy Buy Baby unit could potentially reach a billion dollar valuation, but no qualified bids materialized and Dream On Me eventually acquired the baby segment’s intellectual properties for just $15.5 million.
This could indicate that the current huge pool of investors trading the company’s stock may be doing so on doomed speculation alone, and will come up empty-handed.
Bed bath and beyondThe company’s stock is down more than 91% since the turn of the year, closing Wednesday’s trading at $0.21 per share. While the timing of the common stock withdrawal has yet to be confirmed, it appears that retailers will see their investments go down the drain.
“Our society has decided to be much less regulated in the hope that it would perfect humanity. Meme stock trading, drug use and gambling all fit into this model,” Cole Smead, CEO and portfolio manager at Smead Capital Management, told CNBC.
“It causes destruction among users, but we look the other way because government or industry can benefit from it. We let people degenerate and we don’t care what the consequences are. We wonder why our urban areas are permanently damaged as people flee. to less densely populated areas. They flee from destruction.’
Overstock ‘oversold’
Overstock shares closed trading Wednesday at $24.22 per share, down 44% from the high of $37.86 per share in early August. However, it still remains up 25% year-to-date.
Michael Pachter, director of equity research at Wedbush Securities, told CNBC Wednesday that downloads of the Bed Bath & Beyond app have increased since the rebrand launched early this month, moving the app from the bottom half of the top. 100 download list to the top quartile.
Pachter, who controls the stock, said the download speed indicates that Bed Bath & Beyond’s brand recognition is working for Overstock, and that the stock is now “oversold.”
The share’s appreciation was driven by optimism that the rebrand would boost sales, and we don’t have data to conclusively prove that happens. Investors will have to wait a quarter or two to see if OSTK reports revenue growth, but the app download activity is encouraging,” he said.
Regarding the original BBBYQ stock (with the Q indicating it is now in bankruptcy proceedings), Pachter noted that the company’s debts exceeded its assets even after Overstock paid $21 million.
“BBBY shareholders will likely be left with worthless shares. Retailers are likely hoping that more assets will be sold, but I’m not sure there is anything of value left to sell,” added Pachter.
