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


  • Bed Bath & Beyond (BBBY) is falling as bondholders resist its convertible offering.
  • The offer would dilute BBBY stock but also stave off bankruptcy.
  • Successful speculators know when to sell.
BBBY stock - Why Is Bed Bath & Beyond (BBBY) Stock Down Today?

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Bed Bath & Beyond (NASDAQ:BBBY) shares are continuing to fall on worries about its debt diluting BBBY stock. In the latest chapter of the saga, management has extended a deadline for exchanging debt to reduce payments by two weeks.

The offer was originally made Oct. 18 and due to expire Dec. 5. However, it will now extend to Dec. 19. The offer makes some of the company’s debt convertible into stock, diluting current shareholders.

Bad News, Worse News

The debt offer has already cut the price of BBBY stock nearly in half since it was made. If accepted, the offer would create up to 11.7 million new shares of stock on top of the current 117 million shares outstanding.

But if the deal isn’t taken, things could be even worse. The company has been struggling to keep stores stocked this holiday season as suppliers worry about their goods being lost in a bankruptcy filing.

Until a few years ago, Bed Bath & Beyond was one of America’s most successful home goods retailers, offering a variety of name-brand goods at low prices, often piled to the ceiling. As profits fell, the company tried to pivot to a “curated” collection of store brands under Mark Tritton, a former Target (NYSE:TGT) executive. The coronavirus pandemic prevented that turnaround from taking hold, and Tritton was let go in June.

Small investors became stuck in the name after Bed Bath & Beyond became a meme stock in early 2021. Speculators were pushing each other to buy it against a short squeeze on sites like Reddit’s r/WallStreetBets. The stock rose to nearly $34 per share before plummeting back to Earth. It opened Dec. 6 at $3.54. The market capitalization of $392 million is now barely 5% of last year’s sales.

What Happens Next for BBBY Stock?

Failure of the convertible offer could force a bankruptcy. Bed Bath & Beyond had just $135 million in cash on the books at the end of August and has yet to report November results. The lesson for small investors is that if you’re going to be a gambler, you need to know when to fold, when to walk away and when to run.

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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.

Article printed from InvestorPlace Media, https://investorplace.com/2022/12/why-is-bed-bath-beyond-bbby-stock-down-today-3/.

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