GME - Why Is Bed Bath & Beyond (BBBY) Stock Plunging Today?
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Bed Bath & Beyond (NASDAQ:BBBY) stock is tumbling 40% in early trading after Ryan Cohen’s RC Ventures disclosed yesterday afternoon that it had sold all of its bullish positions in BBBY stock.
The news, disclosed via U.S. Securities and Exchange Commission filing, came just three days after RC reported that it had purchased call options on 1.67 million shares of Bed Bath & Beyond in a separate SEC form. The latter disclosure ignited a huge rally of the shares during the first three days of this week.
Cohen founded Chewy (NYSE:CHWY), an e-commerce company focused on pet products, and is now the chairman of GameStop (NYSE:GME), a video-game retailer.
A Tale of Two SEC Disclosures
The SEC form released yesterday showed that RC Ventures had sold all of its BBY stock for $18.68-$29.22 per share. RC also unloaded all of its call options.
The company sold the shares and options after it disclosed in a separate SEC form on Monday that it had bought call options on 1.67 million shares. The latter news ignited huge gains by BBBY stock.
By selling its BBBY stock after the rally began, RC Ventures realized a profit of $59 million on its investment, CNBC estimated. The firm “may have made additional profits on the options,” CNBC added.
Analyst Downgraded BBBY Stock
In a note to investors today, Wedbush analyst Seth Basham cut his rating on Bed, Bath and Beyond to “underperform” from “neutral.” Cohen’s decision to unload his entire 11.8% stake in the retailer eliminates “a key support leg” for the stock, the analyst stated. Basham added that the company needs to raise additional funds, and he kept a $5 price target on the name.
Cohen’s actions appear to have meaningfully pushed down other meme stocks. Since the disclosure of the sale of all of his BBBY stock, GameStop (NYSE:GME), Koss (NASDAQ:KOSS) and Robinhood (NASDAQ:HOOD) are among the meme stocks that have sharply tumbled.
On the date of publication, Larry Ramer 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.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
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