Bed Bath & Beyond shares sink on rescue deal
STORY: Bed Bath & Beyond on Tuesday put forth a last ditch effort to avoid bankruptcy - but investors aren’t buying it.
The retailer’s stock plunged more than 40% in early trading, after Bed Bath & Beyond said it plans to raise about $1 billion through an equity offering - a move that failed to convince investors the company could avoid filing for Chapter 11.
The troubled home goods chain on Tuesday said the offering would initially provide about $225 million for the company, and an additional $800 million through subsequent installments.
But Wall Street analysts said the extra cash would serve only as a band-aid, offering Bed Bath & Beyond a short window of only a few quarters to revive the business. Throw in a weakening economy, they said, and chances of a successful turnaround look grim.
A part of the meme stock phenomenon, Bed Bath & Beyond's shares, which on Tuesday were trading just above $3, surged as high as $30 last year when activist investor Ryan Cohen took a stake in the company and pushed for changes.
Retail traders have pumped up prices of other meme stocks recently, including AMC Entertainment, which closed nearly 12% higher on Monday, having rallied 67% this year.
But Bed Bath & Beyond’s fate may be sealed – the retailer is also in the midst of closing some 87 flagship stores, in addition to the 150 store closures it announced last year.