Why Is Bed Bath & Beyond (BBBY) Stock Surging Today?

  • Bed Bath & Beyond (BBBY) rose after it got new loans.
  • The loans erased an imminent threat of liquidation.
  • The move gives new CEO Sue Gove time to wring some value from the chain and BBBY stock.
BBBY stock - Why Is Bed Bath & Beyond (BBBY) Stock Surging Today?

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Bed Bath & Beyond (NASDAQ:BBBY) shares rose over 30% overnight after it found a new lender. The gains erased a week’s worth of losses in BBBY stock following reports suppliers might halt product shipments.

BBBY currently trades around $11 per share. That’s well above its $5 per share low in July, but below the $23 per share it hit in mid-August on a meme stock short squeeze. Since the high, Gamestop (NYSE:GME) chairman Ryan Cohen sold his positions.

What Lies Beyond for BBBY Stock

Bed Bath & Beyond stock has been rocked by both bullish and bearish news this year.

The bullish news came from small investors seeking to squeeze shorts and support Cohen, whom they made a hero after the 2021 Gamestop run-up. The bearish news came from fundamentals that cost former CEO Mark Tritton his job.

At its current level, the company has a market cap of about $855 million supporting 2021 sales of $7 billion. The trouble is it’s losing money — $358 million or $4.49 per share just in the last quarter, to be precise, on sales of about $1.46 billion. It also lacks a coherent strategy after dumping Tritton, who tried to make the chain more upscale with private label products. That strategy is being largely abandoned.

Before BBBY found new money, analysts were predicting a Chapter 11 filing, followed by liquidation. Telsey Group had a $3 price target on the stock.

What Happens Now?

There may be an afterlife beyond the meme.

BBBY management, now led by board member and consultant Sue Gove, now has breathing room to get through Christmas, probably with its older strategy of discounting national brands. There was nearly $5 billion in assets and less than $1.4 billion in long-term debt on the books at the end of May.

Gove’s task will be to squeeze value from the assets, probably sell the profitable Buy Buy Baby chain and decide whether the remaining business has a long-term future. There may prove to be some value in it.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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