Retail investors are once again pushing the share price of struggling retailer Bed Bath & Beyond
(BBBY) to the moon.
Bed Bath & Beyond’s stock surged 70% and trading in the shares was halted multiple times due
to volatility. The stock ended yesterday’s (August 16) trading session up 29%.
The reason for the excitement was news that activist investor Ryan Cohen’s venture capital
firm, called RC Ventures, bought distant out-of-the-money call options on more than 1.6 million
Bed Bath & Beyond shares with strike prices between $60 U.S. and $80 U.S.
Essentially, Cohen is betting that Bed, Bath & Beyond’s stock is going to go up as high as $80
U.S. a share. The stock closed on Monday of this week (August 15) at $16 U.S. per share.
The call options that Cohen bought expire in January 2023.
Cohen’s new purchase grabbed the attention of retail investors on the WallStreetBets forum,
and trading volumes in Bed Bath & Beyond exploded with more than 160 million shares
changing hands.
Cohen first revealed he had a 10% stake in Bed Bath & Beyond in March of this year.
At that time, Cohen wrote a letter to Bed Bath’s leadership team, saying he believed the home
goods chain was struggling to reverse market share declines and urging the retailer to sell its
BuyBuy Baby chain.
Later in March, Bed Bath said it reached a deal with the activist investor to add three people
chosen by Cohen to its board of directors.
Following the latest surge, Bed Bath & Beyond’s stock price is up 36% this year and trading at
$20.65 U.S. per share.
