Bed Bath & Beyond’s (BBBY) stock sank 48% on Tuesday, a day after the embattled retailer announced an equity offering to raise as much as $1.025 billion.
One analyst labeled the company’s move a “last ditch effort to secure its future.”
“While the timing of the offering seems relatively opportunistic, given the stock’s 90%-plus price runup Feb. 6, we think the capital allocation choices that are being made under duress are still poor,” wrote Jaime Katz of Morningstar in a note to investors. The analyst has a Sell rating on the stock.
BBBY rose 92% on Monday ahead of the preferred stock and warrants offering announcement, as a recent rally in the nearly-bankrupt company gained momentum.
Shares of the retailer are heavily shorted, with short interest standing at about 53% of the float, according to data compiled by S3 Partners.
Bed Bath & Beyond has been trying to conserve cash as it teeters on the edge of bankruptcy after accruing more than $1 billion in debt and losses by the end of 2022.
The company warned in a recent regulatory filing it was hit with a default notice from JPMorgan and does not have adequate funds to repay its loans.
Meme stocks overall have rallied over the past month as some of the trades reminiscent of the “meme craze” of 2021 have regained popularity so far this year.
GameStop (GME) and AMC (AMC) are both up since the start of 2023. On Tuesday, AMC shares fell 9% after gaining 11% in the previous session.
Bed Bath & Beyond stock has been mostly on an upward trend after hitting a 52-week low of $1.27 on Jan. 6th. On Tuesday, shares closed at $3.01 a piece.
Investors have taken a risk-on approach over the past month, with AI-related equites joining beaten up tech names as the biggest winners in addition to meme names from yesteryear.
Artificial intelligence maker C3.ai (AI) was up 6% on Monday, while smaller-cap, lesser-known names like BigBear.ai (BBAI) soared 18%, and voice AI company SoundHound (SOUN) spiked 42%. All three stocks gave back gains on Tuesday.
