October 1, 2022

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Meme stock in reverse as Bed Bath & Beyond recession scares investors

Meme stock in reverse as Bed Bath & Beyond recession scares investors

(Reuters) – Retail favorites GameStop and AMC Entertainment tumbled Friday, paring much of their recent gains after billionaire Ryan Cohen abruptly ditched his stake in struggling retailer Bed Bath & Beyond days after taking a bullish options position in the stock. .

Bed Bath & Beyond Inc. shares (BBBY.O) They extended their slide, dropping 42% to $10.80, after Cohen said the day before he had sold his 9.8% stake in the company, nearly five months after it piled up and pushed for changes. Read more

The stake sale could result in windfall profits of between $55 million and $60 million for Cohen, according to a Reuters review of regulatory filings. Read more

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Bed Bath & Beyond shares jumped to $30 earlier this week after Cohen bought some call options on Tuesday, jumping from $4.38 in July in frenzied trading that sparked memories of the stock’s memorable rally in early 2021.

Should losses continue, the stock is poised to swallow its 43% weekly gain.

“If this stock doesn’t sell, it looks like it has as real potential as GME 2.0,” said a retailer who had invested in Bed Bath & Beyond when the stock was at $6. “Ryan’s sell-off has unfortunately taken away any momentum.”

Cohen owns about 12% of the shares of GameStop Corp (GME.N)which at the height of the retail frenzy in January 2020 jumped 1,600%, and is the largest contributor.

GameStop and AMC Entertainment (AMC.N) It decreased between 4% and 6%. E-commerce company Vinco Ventures (BBIG.O) down by 17%.

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Despite Friday’s losses, shares are up in the 3% to 55% range this month.

“This latest rollercoaster is unlikely to end the trend in the meme,” said Susanna Streeter, senior investment and markets analyst, Hargreaves Lansdowne, adding that the desire to ride the speculative frenzy has gained steam with the eruption of Wall Street over recent weeks.

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Additional reporting by Anisha Sircar, Susan Mathew and Bansari Mayor Kamdar in Bengaluru; Editing by Shinjini Ganguly

Our criteria: Thomson Reuters Trust Principles.