In June 1867, more than 700 US troops led by Lieutenant Colonel George Armstrong Custer were defeated by the Lakota Sioux and allied Native American tribes in the legendary Battle of the Little Bighorn, also known as the Spot Custer’s last stand. It’s rare to hear Wall Street analysts mention 19th-century history, but Anthony Chukumba, chief executive of Loop Capital, believes that’s the same as what we’re seeing with Bed Bath & Beyond this holiday season. .
“This is really Custer’s Last Stand, and it will end the same way it did for Custer,” he said. yahoo finance on Wednesday. “A year from now, we won’t have the same conversation about Bed Bath & Beyond. Bed Bath & Beyond will disappear.” Of course, Custer didn’t survive the Little Bighorn, as depicted in countless books and adaptations, such as Morning Star.
If Bed Bath & Beyond does eventually go bankrupt, it certainly won’t go away quietly. The company has become a “stock meme” in 2021, skyrocketing thanks to interest from retail investors, who got together to discuss deals on Reddit’s r/wallstreetbets.
After the initial rally in Bed Bath & Beyond stock in 2021, active investors and tough co-founder Ryan Cohen bought millions of shares popular with the retail crowd and became chairman of the board – sparking investors’ hopes that he would turn things around.
The homeware retailer’s stock has rallied nearly 800% from a 2020 COVID low to a 2021 meme stock high, fueled by Cohen’s investment and active engagement. Some traders have made millions in the process—one 20-year-old USC student even net $110 million—but all the while, the company struggled to turn a profit.
Bed Bath & Beyond posted a loss of $559 million in the financial year ending February and more than $700 million in the first and second fiscal quarters of this year combined, SEC filings Shows.
Cohen sold his entire stake in a surprise move in August, pocketing 68.1 million USD profits and caused the biggest-ever intraday drop in stocks. The company’s stock is down more than 84% year-to-date and more than 93% since its 2021 peak above $35 a share.
After Cohen sold his shares, both he and then-CFO of Bed Bath & Beyond, Gustavo Arnal, were charged in US District Court for the District of Columbia of operating a “pump scheme” and dump” artificially increases the value of Bed Bath & Beyond securities.
A few weeks later, Arnal commit suicide by jumping from Manhattan’s iconic “Jenga” skyscraper, leading to a call for an SEC investigation into Cohen’s potential plan to raise stock prices — with former SEC Chairman Jay Clayton saying the regulator may be look at Cohen’s timely exit.
But for investors, Chukumba has a clear message:
“We don’t have to go through all of the things that happened to Bed Bath & Beyond. All you need to know is that they simply don’t fit anymore.”
Chukumba has been discounted on Bed Bath & Beyond for over a year now. In June, he called the company’s earnings report “trash can fire,” warns that it is burning through cash and that inventory is growing.
And in August, he said the stock was top up $1 per share because the business has no “growth momentum” and will need to raise $500 million just to settle its current liabilities and continue operations. This holiday season only strengthens his beliefs.
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