What happened
Shares of Bed Bath & Beyond (BBBY +0.00%) cratered on Monday, falling as much as 13.8%. As of 10:46 a.m. ET, the stock was still down 7.5%.
There were several catalysts that sent home goods retail stock lower. Furthermore, there are increasingly dour predictions for the company in the wake of a regulatory filing last week that revealed billionaire investor Ryan Cohen had sold his entire position.
OTC: BBBY
Key Data Points
So what
Bed Bath & Beyond's choices for raising much needed capital are fizzling, according to a report in The Wall Street Journal. The beleaguered retailer released a troubling financial report in late June, revealing that its net sales cratered 25% year over year, while at the same time the company had negative operating cash flow of $400,000.
Late last week, billionaire investor Ryan Cohen revealed that he had sold his stake in the home goods retailer -- including options -- which amounted to a nearly 10% stake in Bed Bath & Beyond. Unfortunately, many of the meme stock traders who followed him into the company lost faith and bailed out when word of his sale emerged.
This led to a precipitous decline in the stock price, which has fallen roughly 53% since Wednesday's closing price. This development makes it less likely that the company will be able to raise much needed cash from a proposed stock sale, particularly given the plummeting share price.
The situation has gone from bad to worse. Some suppliers have taken to restricting or halting shipments after Bed Bath & Beyond missed payments, according to a report by Bloomberg. Wedbush analyst Seth Basham even suggested that the company is on the verge of declaring bankruptcy.
Now what
Bed Bath & Beyond has been struggling with declining sales for years. Some investors had hoped that the investment from Cohen would provide the spark the company needed to ignite a successful turnaround. The macroeconomic environment only exacerbated the situation for the home goods retailer, which has recently dealt with supply chain disruptions and rising inventory levels as consumers reined in spending.
Given the worsening situation, investors should steer well clear of Bed Bath & Beyond Stock.
