Bed Bath & Beyond Stock Forecast: BBBY loses 12.5% after Ryan Cohen files to sell stake

  • BBBY stock advanced 11.8% on Wednesday before giving it all back after-hours.
  • GameStop chairman Ryan Cohen filed paperwork to sell his entire stake in Bed Bath & Beyond.
  • On Tuesday it was disclosed that Cohen had purchased 16,000 call contracts with strike prices above $60.

Do not ask for whom the closing bell tolls. It tolls for thee, Bed Bath & Beyond (BBBY) stans. The most high-profile believer in the flailing home goods retailer, GameStop chairman Ryan Cohen, has filed a Form 144 with the Securities & Exchange Commission (SEC) that will allow him to dispose of this entire stake amounting to about 11.8% of the corporation.

It was only Tuesday that reports emerged concerning Cohen's ownership of at least 16,000 call contracts on BBBY with strikes above $60. Bed Bath & Beyond stock advanced 29% on that news.

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BBBY stock news

Ryan Cohen, the founder and former CEO of Chewy (CHWY) and now chairman of GameStop (GME), has become seemingly enamored with meme stocks since 2020. As with GameStop during the pandemic, Cohen purchased a more than 10% stake in Bed Bath & Beyond back in the first quarter. He purchased the shares through his investment vehicle, RC Ventures.

The form was filed with the SEC on August 15 and shows that RC Ventures is interested in selling up to 9.45 million common shares and derivative unit equivalents. The filing shows JP Morgan Securities as RC Ventures' broker and says that the investment vehicle can sell all or part of its stake anytime between August 16 and July 31, 2023.

This of course does not mean that Cohen will sell his stake immediately, but it does signal that the king of the meme traders is disposed to doing so. Of course, Cohen's purchase of more than 16,000 call options, expiring in January 2023, with strike prices between $60 and $80 might signal his bullish view. Although it could also just be an attempt to force up the price of the underlying shares so that he can sell them at a profit.

Since he purchased his stake between January 13, 2022 and March 3, 2022, Cohen would have paid between $12.42 and $18.04 for the shares. After announcing the stake, BBBY stock initially rose as high as $30 before trending down this summer to as low as $4.38. This means that at the lows experienced a month ago, Cohen was down about two-thirds on his investment. Recent poor earnings releases hurt the reputation of the stock, and Loop Capital gave BBBY stock a 12-month price target of $1 recently.

At current prices above $20, Cohen should be up approximately 30%-40%. The filing says that RC Ventures is interested in selling 7.78 million shares of common stock, as well as 11,257 $60 call contracts, 444 call contracts with a $75 strike, and 5,000 call contracts with an $80 strike. All of these options expire on January 20, 2023.

BBBY stock forecast

BBBY stock reached $30 resistance on Wednesday before ending the session lower. The premarket is seeing BBBY shares break below $20, but shares appear to just be testing that region. A sizable break through $20 should send the stock back to $12.50, which worked as support in both January and February of this year.

If BBBY stock superfans decide to ignore the Cohen news, then a break above $30 should send bulls lunging for $44.51 and $53.90 – past swing highs. Longer-term support sits between $4.50 and $5 if this meme stock tirade ends.

BBBY stock chart

BBBY weekly chart

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