Bed Bath & Beyond’s share price plummeted this week, leaving many investors who bought shares in the ailing homewares retailer suffering stifling losses.
But at least two investors have walked away with millions in profits after selling their stake in the company before the bottom fell. One is Ryan Cohen, the billionaire founder of online pet food company Chewy, while the other – and even more surprisingly – is a college student at the University of Southern California.
Cohen sold all of his 7.7 million shares Tuesday, according to a Securities and Exchange Commission filing. He made a whopping $178 million in profit, Barron’s reported. Cohen bought and sold his shares through his investment firm, RC Ventures.
Bed Bath & Beyond did not respond to a request for comment on Friday.
Bed Bath & Beyond was one of a handful of so-called meme stocks, including video game retailer Gamestop, that retail investors have embraced over the past year despite Wall Street players who have largely written off the companies. As a result, Bed Bath & Beyond’s stock price rose from $3.70 per share at the start of the pandemic in March 2020 to about $30 each in June 2021.
The company’s stock saw another surge this year, thanks in large part to Cohen himself and a new army of meme stock investors.
But on Friday, Bed Bath and Beyond’s stock price fell nearly 41% to close at $11.03 for the day after rallying as high as $28 earlier this week. Most of that drop came after investors noticed that Cohen had sold his stake, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Bed Bath & Beyond’s stock price held up this year, and then “suddenly the standard-bearer of the rise rose and kind of left,” Dusaniwsky said. “He deflated the balloon.”
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Bed Bath & Beyond has become the talking point on WallStreetBets, a Reddit page where meme stock investors talk strategy. In the posts, some users are reacting to Cohen’s sale, while others are urging their fellow investors to stay the course and hold on to their shares.
“It hasn’t returned to its pre-meme (price) lows,” Dusaniwsky said. “It’s those who hold it until it’s back down there who will regret not selling it sooner.”
Before stocks of Bed Bath & Beyond went flat, they also yielded a hefty return for Jake Freeman, the Financial Times reported. A regulatory filing shows USC’s economics and math major bought about 5 million shares of the company’s stock in July and then sold them on Wednesday, netting a profit of $110 million.
Freeman told the Financial Times he bought his shares for $5.50 a share and that the price began to rise soon after.
“I certainly wasn’t expecting such a vicious rally to the upside,” Freeman, 20, told the newspaper. “I thought this was going to be a six-month play.”
Freeman did not respond to a request for comment Friday. He told the Financial Times that he received the money for his investment in Bed Bath & Beyond from friends and family.
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Christopher J Brooks