Troubled Bed Bath & Beyond Is The Target Of A Short Squeeze, Reddit Hype

Zinger Key Points
  • The Union, New Jersey-based retail chain is considering a sale of its Buy Buy Baby Inc. segment.
  • The business said last week that it was discontinuing one of its private labels, Wild Sage.

Home furnishings retailer Bed Bath & Beyond Inc. BBBY is the target of a systematic short squeeze by the Reddit traders also known as 'Apes.'

On Monday, according to Benzinga Pro, the short float for Bed Bath was over 46%, making it one of the most widely shorted stocks on the Nasdaq.

Bed Bath is currently the most talked-about stock on Reddit, according to Finder, which tracks equities discussed by Reddit users.

See Also: Bed Bath & Beyond Analyst Says Debt Restructuring Won't Save The Company

Interest in the meme stock accelerated late last week when shares of Bed Bath rocketed over 30% between Thursday's close, and Friday's close, despite there being no fresh corporate news. The rise continued into Monday.

The retailer has had a fairly average period overall, as evidenced by its first quarter 2022 results, which showed declining sales, burning cash flow, and widening losses.

The business said last week that it was discontinuing one of its private labels, Wild Sage, following a failed push into exclusive brands.

The company's board of directors announced significant changes to the management team at the end of June, including the departure of the previous CEO Mark Tritton, Chief Merchandising Officer Joe Hartsig, and its Chief Accounting Officer.

According to CNBC, Bed Bath will deliver additional updates to its strategy in the coming weeks. As the troubled business burns through its cash, Bloomberg reported on Friday that the company is thinking about using the private credit market to increase liquidity.

Direct lenders were engaged by the management of the company over a potential new asset-based loan line. At the end of May, the business had around $108 million in cash and equivalents, down from $1.1 billion a year earlier.

Earlier this year, the Union, New Jersey-based retail chain grabbed headlines when activist investor Ryan Cohen issued a letter to the company urging it to spin off or sell its Buy Buy Baby Inc. segment. The board agreed to temporarily expand, and the new appointees are exploring options for the Buy Buy Baby brand.

See Also: Ryan Cohen, Bed Bath & Beyond Reach Agreement: Here Are The Details And Why It's Important

Price action: Shares of Bed Bath & Beyond rose 39.46% to $11.38 on Monday, according to data from Benzinga Pro.

Photo: Courtesy of Mike Mozart on Flickr

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Posted In: M&AMid CapShort SellersSmall CapTrading IdeasGeneralbuybuy BabyRyan Cohen
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