BBBY - Bed Bath & Beyond stock falls 33% as wild swings continue

Bed Bath & Beyond ( NASDAQ: BBBY ) fell sharply in premarket action on Tuesday after a 92% jump on Monday on sky-high volume of over 238M shares. There are only 117M shares of BBBY outstanding, which meant every share of BBBY was effectively flipped twice during the Monday session.

The downswing on Tuesday is based on the decision announced late on Monday by Bed Bath & Beyond ( BBBY ) to raise money through the issuance of convertible preferred stock and warrants. The share sale could being in as much as $1B is successful. BBBY will enter into a waiver and amendment to its credit agreement that is currently in default as part of its recovery bid,

Wedbush Securities analyst Seth Basham the transactions could buy the retailer a few more quarters of room to turn around its operation. However, he warned that BBBY still faces a weak macro backdrop and high execution risk with inventory, assortment, customer re-engagement, and cost savings initiatives under an interim new management team.

The firm dropped its price target on Underperform-rated Bed Bath & Beyond to $0 from $1 with the highly dilutive offering of preferred stock seen limiting upside even if bankruptcy is avoided.

Shares of BBBY fell 30.55% to $4.07 in premarket trading. The 52-week high for shares is $30.06.

On Seeking Alpha, Marketplace author Bohdan Kucheriavyi outlined his reasons to avoid the highly-shorted stock.

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