The soap opera at Bed Bath & Beyond (NASDAQ:BBBY) took another hopeful turn after it completed a $48.5 million equity offering.
Shares in the troubled home goods retailer rose 6% on April 11 and another 1% overnight. BBBY stock is due to open this morning, April 12, at 31.7 cents per share, a market capitalization of $134.5 million.
Almost Dead Is Slightly Alive
Retail investors have been intrigued by Bed Bath & Beyond since early 2021. Then it was part of the “meme stock” craze that also took AMC Entertainment (NYSE:AMC) stock to new highs on a short squeeze.
Since then, the company has fired Mark Tritton, who tried to make it a curated home for store brands instead of an off-price retailer of name brands. Tritton is now suing over his severance. Under interim CEO Sue Gove, it has tenaciously fought off what seems like an inevitable bankruptcy, closing stores and chains as it seeks to raise cash.
Every day the soap opera brings new headlines. Thieves are brazenly running out of merchandise. Naked short sellers, who don’t bother lining up stock they’ll buy before they sell, are attacking the company.
Investors are most interested in the efforts to raise cash by selling stock. The company missed interest payments on its debt in February after failing to file its 10-Q report with regulators. It made those payments in March but is now forced to have another company buy inventory on its behalf, filling the stores but reducing potential margins.
All this will be discussed on May 9 at a special shareholder meeting to approve the reverse stock split. Gove warns that failure to get approval for the reverse split would lead directly to bankruptcy.
BBBY Stock: The Bottom Line
The BBBY story has been entertaining, in the way a slasher film or a big car wreck is entertaining.
But when customers and vendors smell the stink of bankruptcy, they run away. It’s hard to see who might now run in to save the company or what their terms might be.
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.
