Bed Bath & Beyond (NASDAQ:BBBY) stock is surging 70% higher today on news that activist investor Ryan Cohen has taken a stake in the retailer.
The stock of the Union, New Jersey-based company is soaring on media reports that GameStop (NYSE:GME) Chairman Ryan Cohen has taken a nearly 10% stake in Bed Bath & Beyond through his investment company RC Ventures.
What Happened With BBBY Stock
Cohen wrote a letter to Bed Bath & Beyond’s board of directors, outlining his concerns with the company’s losses and supply chain struggles. He also took fault with CEO Mark Tritton for his compensation levels during a period of underperformance for BBBY stock.
Bed Bath & Beyond confirmed that it received his letter on March 6. However, the retailer said it has not had previous contact with Cohen or RC Ventures.
“We will carefully review their letter and hope to engage constructively around the ideas they have put forth,” Bed Bath & Beyond said in a written statement. “2021 marked the first year of execution of our bold, multi-year transformation plan, which we believe will create significant long-term shareholder value.”
Investors likely know that Cohen is the co-founder of Chewy (NYSE:CHWY). He shot to further prominence while leveraging his e-commerce background for GameStop.
Retail investors who favor so-called meme stocks follow Cohen and his moves closely. The stock of GameStop jumped sharply higher after Cohen became the company’s chairman. In fact, BBBY stock has itself been treated as a meme stock over the past few years, with its share price hitting $44 last June.
Why It Matters
Cohen is the latest in a series of activist investors to target Bed Bath & Beyond for its underperformance. In 2019, the company settled a a fight with activist investors that resulted in four new board members and the hiring of Tritton, a former Target (NYSE:TGT) executive, as the company’s CEO.
Since stepping into those shoes, Tritton has embarked on a turnaround plan. He closed especially poor-performing stores and sold off assets like Cost Plus World Market and Christmas Tree Shops.
However, Cohen is not happy with this plan so far. He wrote that this “scattershot strategy” isn’t working. Instead, he believes Bed Bath & Beyond could be better suited with a private equity owner.
What’s Next for Bed Bath & Beyond
It looks like Ryan Cohen is girding for changes at Bed Bath & Beyond, which could be good for the company and its shareholders over the long term. More immediately, BBBY stock looks set for a big move higher today as retail investors show their support for Cohen’s stake in, and involvement with, BBBY.
On the date of publication, Joel Baglole did not have (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.
