It might be fine for short-term speculators to trade Bed Bath & Beyond (NASDAQ:BBBY) stock. However, it’s too risky to consider holding shares of Bed Bath & Beyond for the long term.
The company has too many problems, and has even filed for Chapter 11 bankruptcy protection.
Bed Bath & Beyond never really recovered from the Covid-19 crisis. Between that crisis, threats from e-commerce retailers and elevated inflation, Bed Bath & Beyond struggled just to survive.
The company has a terrible quarterly earnings track record and $1.03 billion worth of long-term debt (according to the company’s most recently filed Form 10-Q). Now, it’s not a question of whether BBBY will lose value, but how far it might fall in 2023.
| BBBY | Bed Bath & Beyond | $0.12 |
BBBY Stock Is Popular for the Wrong Reasons
FOMO, or fear of missing out, is a potent force in the financial markets. Traders want to recapture the magic of 2020 and 2021, when meme stocks ruled the landscape and they could make quick fortunes.
Of course, those same fortunes could also be lost quickly. You still might have seen alarming headlines declaring that BBBY stock rises as bankruptcy looms.” It just goes to show that the irrational, FOMO-driven crowd often refuses to learn the lessons of the past.
Outside of the meme-trade scene, Bed Bath & Beyond’s reputation deteriorated rapidly in 2023. As reported by Barron’s, “vendors fearing a potential bankruptcy filing had requested upfront payments and cut credit limits” with Bed Bath & Beyond.
The company’s own vendors were (and probably still are) afraid to conduct business with Bed Bath & Beyond. Still, some folks will insist on buying the dips with BBBY stock in hopes of a miraculous, sustainable recovery.
Final Countdown for Bed Bath & Beyond?
You can’t say I did not warn you. Previously, Bed Bath & Beyond admitted it “will likely file for bankruptcy protection” if the company cannot receive the proceeds from a $300 million common stock offering.
Recently, per The Wall Street Journal, Bed Bath & Beyond was “preparing a bankruptcy filing.” Bed Bath & Beyond’s falling share price “makes it near impossible to raise enough capital to avert default.” And finally, the worst-case scenario happened: Bed Bath & Beyond reportedly “filed for Chapter 11 bankruptcy protection.”
And so, we’re witnessing a vicious cycle. As BBBY stock falls further – it declined 35.34% just on April 20 – Bed Bath & Beyond’s reputation continues to deteriorate. This is likely to perpetuate the selloff, and the cycle could persist indefinitely.
Meanwhile, Bed Bath & Beyond hopes to get the shareholders’ approval to enact a reverse split of the company’s shares. This could prevent a delisting from the Nasdaq exchange for a little while, but it’s not a permanent fix for Bed Bath & Beyond’s fundamental problems.
How Much Further Could BBBY Stock Fall?
Along the company’s downward path, Bed Bath & Beyond might be targeted by meme stock traders for a short squeeze. This shouldn’t entice long-term investors, though. There’s too much risk to get involved with a buy-and-hold strategy.
It’s entirely possible that BBBY stock could fall to 10 cents this year. A reverse split, if it occurs, wouldn’t actually increase the value of the shares. So, the safest policy in 2023 would be to simply refrain from investing in Bed Bath & Beyond.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
