Bed Bath & Beyond plans share sale after meme bounce, stock plunges in after-hours trading

Dow Jones2023-02-07

MW Bed Bath & Beyond plans share sale after meme bounce, stock plunges in after-hours trading

By Emily Bary

Bed Bath & Beyond will seek to raise more than $1 billion after shares nearly doubled Monday

Bed Bath & Beyond Inc. plans to sell shares after a rally in the stock of the company, which is on the verge of bankruptcy.

After Bed Bath & Beyond $(BBBY)$shares more than doubled in Monday's session, the company revealed plans to sell convertible preferred stock as well as warrants to purchase common shares and convertible preferred stock. The company expects to raise at least $225 million in the sale, but hopes for more than $1 billion, noting the possibility of "an additional approximately $800 million of gross proceeds through the issuance of securities requiring the holder thereof to exercise warrants to purchase shares of Series A Preferred Stock in future installments assuming certain condition [sic] are met."

Bed Bath & Beyond led a revenge of the meme stocks Monday, with shares rallying 92% during the session thanks to an afternoon surge. The stock turned around in late trading after the sale news, however, falling more than 20%.

The beleaguered retailer ultimately is expected to file for Chapter 11 bankruptcy, but that hasn't stopped its stock from enjoying a sharp rise to start the year. Bed Bath & Beyond shares are ahead 133% to start the year, taking into account Monday's gains.

The stock was halted twice in afternoon trading Monday and racked up intraday gains upward of 130% before pulling back.

Bed Bath & Beyond disclosed in late January that it was in default on loans that were called in. It previously acknowledged a delisting notice from the Securities and Exchange Commission due to its late quarterly filing.

Read: What's next for Bed Bath & Beyond after defaulting on its loans?

Other "classic" meme stocks enjoyed boosts in Monday afternoon activity as well. Shares of AMC Entertainment Holdings Inc. $(AMC)$ were briefly halted at 3:28 p.m. Eastern time Monday, before trading resumed at 3:33 p.m. Shares closed up about 12%, though they were up more than 20% earlier Monday.

Shares of fellow meme stock GameStop Inc. $(GME.AU)$ saw a sharp move higher as well, rallying more than 7% on the day after surging as much as 11.8% earlier in the trading session.

GameStop's stock is up 29% on the year, while AMC's is up 67%, in another sign of the market's bullishness.

Investors have been keener this year to embrace embattled companies. Bed Bath & Beyond's 133% stock surge thus far in 2023 trails the 183% rally seen in shares of Carvana Co. (CVNA), the used-car retailed that saw its stock plunge 91% in 2022 amid concerns about the company's debt and liquidity levels.

See more: Carvana stock enjoys best week ever as 'meme-like' run continues

Shares of Nordstrom Inc. $(JWN)$, which now counts activist Ryan Cohen among its investors, pulled back in Monday trading but have risen 50% so far in 2023. Cohen, the co-founder of Chewy Inc. $(CHWY)$, took a stake in GameStop in 2020 and began agitating for change at the videogame retailer.

-Emily Bary

 

(END) Dow Jones Newswires

February 06, 2023 17:25 ET (22:25 GMT)

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