Yesterday, Bed Bath & Beyond put forward a Notification of Late Filing, which included a “going concern” warning and “substantial doubt” with respect to the company’s ability to operate on its own. Additionally, the company has far from ruled out the potential that bankruptcy could be on the horizon, given its current financial situation.
With an earnings presentation upcoming on Jan. 10, some investors have taken to Twitter to promote their thesis that Ryan Cohen could come back to Bed Bath & Beyond as the white knight the company needs. Right now, this appears to be purely speculation. There haven’t been any indications the company will consider adding Cohen to the board. Accordingly, perhaps this discourse represents hope among retail investors.
Let’s dive into whether such a scenario is possible and what this might mean for BBBY stock.
Can Ryan Cohen Save BBBY Stock?
GameStop (NYSE:GME) chairman Ryan Cohen famously invested in Bed Bath & Beyond early last year, before dumping his stake a few months later in August. His reported $59 million gain from this transaction included some sales as high as $29.22. For a stock that’s now trading at $1.35 at the time of writing, that’s a pretty good short-term trade by what many refer to as the “smart money” in the room.
Accordingly, it’s unclear whether the thesis that Cohen will step back in holds any water. It appears Mr. Cohen’s previous interest in Bed Bath & Beyond was purely short term, and there are few outside the retail trading community who believe a return is likely. However, it’s certainly a possibility many investors are clearly taking into consideration right now.
With BBBY stock sinking another 20% today, the market appears to be taking a pretty clear stance that bankruptcy is more likely than not for this embattled retailer. The company reportedly expects a net loss of around $385 million for Q3, which is 40% worse year-over-year. Thus, things appear to be getting worse for a company that’s already down on its luck. Sometimes, short sellers are correct in their thesis. This may certainly be a situation where that is the case.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald's love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.