The long, sad story of Bed Bath & Beyond (OTCMKTS:BBBYQ) is finally coming to an end. Since the home furnishing retailer filed for Chapter 11 bankruptcy in April 2023 and delisted from the Nasdaq, it has been in a race to the bottom. The company’s troubles by no means started then. But even selling off its remaining assets hasn’t been enough to spur any real growth. Any pops that BBBYQ stock has seen have been due to superficial retail investor-driven momentum.
Now the end is finally in sight for any investors who still hold shares. As InvestorPlace‘s Eddie Pan reports: “On Sept. 12, the company will hold a plan confirmation hearing to discuss the bankruptcy and final approval of its disclosure statement.” After that, Bed Bath & Beyond will be liquidated, extinguishing all investor interest in the company.
As grim as things appear, BBBYQ stock began today with an expected surge. However, according to one expert, investors should expect volatility until the company is liquidated. Today’s performance supports his hypothesis.
The End of the Line for BBBYQ Stock
Two days ago, financial expert and market commentator Bernard Zambonin laid out his take on BBBYQ stock pre-liquidation. As he saw it, investors should prepare for “volatility until the bitter end” as the company prepared for its last stand. Zambonin notes that the company has been prone to price swings due primarily to attention from retail investors. As he notes:
“Since the company filed its Chapter 11 plan on July 20, BBBYQ shares have plummeted by about 45%. Most shareholders have dumped their positions in order to squeeze out any remaining value.
However, BBBYQ shares are still more than 150% above the 52-week lows they reached briefly after the announcement of Chapter 11. Some never-say-die retail shareholders are still hoping for a turnaround in the company’s restructuring plan, while others are trying to spur one last Bed Bath & Beyond short squeeze. Short interest in Bed Bath & Beyond shares remains very high, with cost-to-borrow rates exceeding 80% on average throughout August.”
Today’s price action has been in keeping with Zambonin’s assessment. BBBYQ stock began the day by rising, reaching gains of almost 20% as midday approached. But since the afternoon hit, shares have been gradually trending downward, erasing most of their earlier progress. As of this writing, the stock is up only 4% for the day, and its trajectory doesn’t hint at another rally. While it may not be the bitter end for Bed Bath & Beyond just yet, shares have certainly experienced high volatility. This trend is likely to continue over the next two weeks as September 12 approaches.
What This Means for Investors
As both Zambonin and Pan noted in their reports, Bed Bath & Beyond will live on in name as a property of Overstock.com (NASDAQ:OSTK). But it is more important than ever for investors to understand that once the company is liquidated, nothing will be returned to them, and their holdings will be extinguished. Anyone still holding shares at that point will be left with no shares or anything else, regardless of their initial position in the stock.
Bed Bath and Beyond’s retail investors have demonstrated a clear willingness to go down with their sinking ship, refusing to ditch their shares throughout bankruptcy and the declines that followed. But anyone who hasn’t sold yet should take advantage of this volatility and sell on the next pop. Zambonin has raised the possibility of these investors switching to Overstock.com. As OSTK stock is on a dip this week, this could be a highly strategic time to ditch BBBYQ stock and make the jump to a company that isn’t about to liquidate itself.
On the date of publication, Samuel O’Brient 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.comPublishing Guidelines.
