Bed Bath & Beyond (NASDAQ:BBBY) stock is down another 15% in early trading today. This decline comes after the company announced plans for a reverse stock split.
Shareholders of record as of March 27 will be able to vote on the reverse split. Management wants the split to be in the range of 1-for-5 to 1-for-10. Interim CEO Sue Gove says the plan “will enable us to continue rebuilding liquidity to execute our turnaround plans and better position the Company financially.”
Before the market opened today, March 20, shares of BBBY stock traded for around 90 cents apiece. However, they were worth more than $5 as recently as early February. The market capitalization of the company now sits below $110 million on trailing 12-month sales of more than $6 billion.
BBBY Stock: Requiem for a Meme
Bed Bath & Beyond tried to reinvent itself before the Covid-19 pandemic.
The company was founded to sell brand-name home goods at a discount. Under CEO Mark Tritton, Bed Bath sought to become a curated retailer of high-quality store brands. The stock paid its last dividend — 17 cents per share — in early 2020.
But the turnaround plan failed. Sales collapsed as the company rolled out new stores. Tritton was let go last June, replaced by board member Sue Gove. As the new CEO, Gove tried to resurrect the old model against a backdrop of collapsed consumer confidence, closing stores and selling or shuttering subsidiaries.
Meanwhile, in 2021, BBBY became a meme stock. Small investors piled into a short-squeeze trade. At the height of the mania, BBBY stock traded for more than $35 per share.
The fall of Bed Bath & Beyond stock was marked by several efforts to engineer another squeeze. Investors could have gotten out for $22 per share last March and around $13 last September. This past February’s price spike seems to have been the last.
What Happens Next?
So, what can investors expect moving forward?
A reverse split will buy management time to negotiate an orderly sale of the company, but investors should be under no misapprehension. Bed Bath is headed into the great beyond.
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On the date of publication, Dana Blankenhorn 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.