- Without a recovery, the company’s market capitalization of $152.25m would essentially boil down to nothing for common shareholders.
- In its filing with the Securities and Exchange Commission in April, the company warned that trading in its shares during the ongoing Chapter 11 cases was “highly speculative and posed significant risk.”
The Bed Bath & Beyond logo is seen at the store in Williston, Vermont on June 19, 2023.
Jacob Borzycki | Norphoto | Getty Images
Bed Bath & Beyond shares continue to trade in huge volumes even as the hugely popular meme stock is weeks away from being declared worthless.
According to Nasdaq data, more than 15 million transactions executed On August 16th In shares of the stricken home retailer, which filed for Chapter 11 bankruptcy in late April and has begun closing its brick-and-mortar stores in recent months after multiple fundraising efforts failed to keep the company above water.
Its intellectual property has been acquired at auction by Overstock, which has adopted the Bed Bath & Beyond brand and relaunched the business as an online-only retailer earlier this month. It also plans to adopt the company’s stock ticker and change the current OSTK to BBBY in hopes of capitalizing on the old family name. The original company’s physical stores have been closed and its assets will be liquidated.
In its filing with the Securities and Exchange Commission in April, the company warned that trading in its shares during the ongoing Chapter 11 cases was “highly speculative and posed significant risk.”
“The trading prices of the company’s securities may have little or no relationship to the actual recovery, if any, by holders of the company’s securities in Chapter 11 cases,” Bed Bath & Beyond said.
“The Company anticipates that holders of common stock of the Company may experience a substantial or complete loss of their investment, depending on the outcome of the Chapter 11 case.”
In a subsequent bankruptcy plan published on July 20, the company asserted that “in the event of full and final satisfaction of each permitted interest in the BBB, each permitted interest in the BBB will be rescinded, released, and extinguished, and shall have no further force or effect.” Any holder of interests in the BBB may obtain any redemption or distribution under the Plan on account of such interests.
Without a recovery, the company’s market capitalization of $152.25 million essentially boils down to nothing for common shareholders, who fall behind several levels of bondholders in the food chain to pay and don’t get a vote on the plan.
The company’s planned confirmation hearing will take place on September 12, but there were no positive catalysts for the recent purchases of the company’s shares.
Activist investor and GameStop chairman Ryan Cohen fueled optimism last year by suggesting that a successful Buy Buy Baby unit could achieve a $1 billion valuation, but no qualified bids came to fruition, and Dream On Me eventually acquired the property’s assets. Intellectual for the children’s sector for only $ 15.5 million.
This may indicate that the current large numbers of investors who trade in the company’s shares may do so on doomed speculation and will be left empty-handed.
Bed Bath & Beyond stock is down more than 91% since the turn of the year and closed trading Wednesday at $0.21 a share. Although the timing of the decommissioning of the equities has yet to be confirmed, it appears that retail traders will eventually see their investments disappear.
“Our society decided to be a lot less regulated in hopes that it would improve humanity,” Cole Smead, CEO and portfolio manager at Smead Capital Management, told CNBC. “Stock trading, drug use and gambling all fit that mold.”
“It causes destruction among users, but we turn a blind eye because the government or companies can benefit. We allow people to become degenerate and we don’t care about the consequences. We wonder why our urban areas are permanently damaged while people flee to less dense areas. They flee destruction.”
Shares of Overstock closed Wednesday trading at $24.22 a share, down 44% from a high of $37.86 a share set at the beginning of August. However, it is still up 25% year-to-date.
Michael Pachter, managing director of equity research at Wedbush Securities, told CNBC on Wednesday that he’s seen downloads of the Bed Bath & Beyond app increase since a brand new launch at the start of the month, with the app moving from the bottom half of the top 100 download list to the quarter. the above.
Butcher, who covers stocks, said the download rate indicates that Bed Bath & Beyond’s brand recognition is working in Overstock’s favor, and its shares are now “oversold”.
“The share appreciation is due to optimism that the rebranding will boost sales, and we don’t have data to definitively prove that is happening. Investors will have to wait a quarter or two to see if OSTK delivers revenue growth, but app download activity is low.” Encouraging,” he said.
Regarding the original BBBYQ shares (with Q specifying that it is now in bankruptcy proceedings), Pachter noted that the company’s debt exceeded its assets even after Overstock paid $21 million.
“BBBY shareholders are likely to have shares of no value left. It is possible that retailers will hope there will be more asset sales, but I’m not sure if there is anything of value left to sell,” added Pachter.