Bed Bath & Beyond (NASDAQ:BBBY) stock continued its downward spiral Monday, losing 16% of its value following last week’s brutal selloff. What’s behind BBBY’s plummet today?
It appears Bed Bath & Beyond is continued its plunge following reports that some of the home retailer’s suppliers have ceased shipping products due to non-payment. According to Bloomberg, several creditors have revoked coverage of BBBY, leading the company to fall behind on payments for its inventory. It’s truly the icing on top of the meme cake that BBBY has constructed.
Indeed, last week, Ryan Cohen sold his 11.8% stake in the volatile meme stock. Unfortunately for fans, Cohen’s sale sparked a massive selloff. This is clearly reflected in the BBBY stock price.
Many believed Cohen’s stake was a positive sign. Many hoped Cohen, the founder of Chewy (NYSE:CHWY) and current GameStop (NYSE:GME) chairman would return the company to generating cash. As such, with his departure, it’s no surprise to see many investors lose faith.
Is There Hope Left for BBBY Stock?
Bed Bath & Beyond’s tumble has put a spotlight on the company’s recent failures. In late June, the retailer announced net sales were down 25%, with negative cash flow of $400,000. As investors have abandoned the company en masse, its funding and liquidity issues have become even more apparent.
BBBY has floated off of its overextended share price for quite some time. Indeed, BBBY hit as high as $30 on Aug. 17 before its dramatic fall. Currently shares are trading for $9.24, a level many analysts believe is still too high.
Bed Bath & Beyond remains a cautionary tale. While it is easy to underestimate the staying power of meme stocks, the path forward for BBBY is hazy to say the least.
According to Wedbush analyst Seth Basham, the company may well be on the way to bankruptcy.
On the date of publication, Shrey Dua 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.