The wild ride toward bankruptcy continues for Bed Bath & Beyond (NASDAQ:BBBY) stock. Shares rose 35% on April 19, then fell 23% overnight as the company considers filing for Chapter 11 bankruptcy. Bloomberg reported a filing could come at any time in the next few weeks.
Shares opened at about 36 cents each on April 20 after trading at 46 cents late on April 19. The market capitalization at the lower price is about $150 million.
BBBY Stock: The Road to Bankruptcy
Interest in BBBY stock on social media continues. But the overall sentiment is now evenly split. On r/WallStreetBets, two-thirds of commenters are now negative.
Bullish traders at Stocktwits continue to talk about a short squeeze. But even if the company escapes near-term bankruptcy, the fundamentals are miserable.
You can squeeze profits from a failing company’s stock by buying against short sellers and watching every tick on a stock chart. But this is gambling. This is what small investors should have learned from BBBY’s meme stock days when shares briefly rose to $35 each. Those who sold there had a good trade, but too many didn’t. The stock has since peaked repeatedly but always at lower levels.
Investing in failing companies is a fool’s game. The curtain could come down for BBBY before April 26. Even a 1:20 reverse split, which BBBY is contemplating for May 9, would not get the price of the shares to $10.
The reality of failure is brutal. Long-time employees are getting stiffed on severance as the company acts ahead of a new law against the practice in its home state of New Jersey. BBBY is even losing ground in bridal registries to Target (NYSE:TGT) and Amazon (NASDAQ:AMZN).
What Happens Next?
InvestorPlace writers, including this writer, have screamed at investors to get out of BBBY stock until we’re hoarse. Those who didn’t listen have only themselves to blame.
On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
