News, Price Analysis, Stocks

BBBY Stock Has Plummeted; Bankruptcy Highly Possible

  • Bed Bath & Beyond stock has plunged this week.
  • The leading stakeholder Ryan Cohen dumped his shares.
  • The firm hired restructuring experts.

Bed Bath & Beyond sees its stock unraveling. The share dropped over 35% yesterday, shading most gains acquired over the last few weeks. Meanwhile, it closed Thursday at $18.55, massively lower than the week’s peak at $30.

Will the Company Survive?

BBBY stock has seen its price falling hard over the past few days. The downside appeared after Ryan Cohen dumped the shares. Meanwhile, RC Ventures sold 8M shares from $18.68 to $29.22. Ryan is a renowned entrepreneur and investor who formed Chewy and is the current GameStop chairman.

He dumped the shares amidst concerns about whether the firm will survive. The company reported a 25% drop in revenue in June, hitting $1.46 billion. It surrendered $2.83 per stock, mossing experts’ prediction by $1.44. Furthermore, same-store sales declined by 24%.

Besides Ryan’s sales, BBBY shares crashed after the firm employed a streamlining lawyer to mend its balance sheet. Bed Bath & Beyond hired Kirkland and Ellis, a leading law firm with high experience in the space.

The company’s debt has become uncontrollable amid sinking profitability and sales. The latest quarter saw the firm claiming it boasted $107.5M in cash & equivalents. Its overall liabilities increased to above $5.17 billion. Moreover, Bed Bath & Beyond owes $1.5B in capital leases & $1.38B in long-term debt.

Considering the growing slipping amidst elevated inflation, the company has a higher chance of filing for insolvency. Another possible action is to raise funds through new share issuance, translating to increased dilution.

Should You Buy BBBY Stock?

BBBY stock has seen a brutal performance this week due to Ryan’s impact on the firm. He hired three directors, meaning he’s a well-informed insider. Thus, Bed Bath & Beyond isn’t a lucrative option for long-term investments. Moreover, the company has a massive debt, faces enormous competition, and experiences stalled growth.

Nevertheless, BBBY remains a top meme stock. That means the stock will likely witness increased volatility plus a possible squeeze. Previously, bankrupt companies such as Hertz and Revlon saw their shares going parabolic as they dipped into bankruptcy.

Editorial credit: Jonathan Weiss / shutterstock.com

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