BBBY Stock Alert: How Bed Bath & Beyond Bankruptcy Created $1 BILLION

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It has been a rough stretch for Bed Bath & Beyond (NASDAQ:BBBY), but that’s what happens when a company files for bankruptcy. Indeed, BBBY stock has really taken it on the chin lately. For one, shares fell nearly 35% on Monday. Of course, the stock is up 8% in the green today, but that doesn’t matter much now.

Shares are currently down more than 50% over the past five trading sessions. Most of Bed Bath & Beyond’s recent losses have been fueled by its recent bankruptcy filing over the weekend. Prior to that, losses were being fueled by speculation around an eventual bankruptcy.

Some BBBY stock investors chose to ignore the retailer’s reality. However, the short sellers did not. In fact, the decline in Bed Bath has netted short sellers some significant gains. New data shows just how much:

“The 99% plunge in the shares this year has delivered a $142 million boost in mark-to-market profits for short sellers, according to S3 Partners data, bringing potential returns since the January 2021 peak to $1.3 billion. For retail traders who bet on the meme stock, they’re likely sitting on losses of nearly $140 million this year, according to a Bloomberg analysis of Vanda Research data.”

It feels harsh to say that the collapse in BBBY stock was a long time coming. However, it truly feels that way. For years now, lackluster firms and poor businesses have seen their share prices pop higher, stave off bankruptcy and become meme stocks as they soar hundreds or thousands of percent higher.

What’s Left of BBBY Stock Now?

The writing was on the wall with BBBY stock. As I wrote on March 30 after the company’s scrapped Hudson Bay deal, “The latest news is not good, as the retailer ‘warned it will likely go bankrupt if a last-gasp $300 million equity offering fails.’”

Of course, management tried to talk positively. “The actions we’ve taken have enabled us to create the necessary financial runway to begin restoring our iconic Bed Bath & Beyond and Buybuy Baby businesses,” CEO Sue Gove said at the time.

Those comments came on the heels of Bed Bath & Beyond trying to push through a $300 million at-the-market offering. Still, retail traders should have been alarmed when the company warned about the risk of not receiving proceeds in time.

 “If we do not receive the proceeds from the offering of securities covered by this prospectus supplement, we expect that we will likely file for bankruptcy protection, in which case holders of our common stock will likely receive no recovery at all.”

Now down more than 90% in 2023 and about 99% over the past 12 months, picking over BBBY stock is just picking over the scraps.

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On the date of publication, Bret Kenwell did not hold (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.

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