Bed Bath & Beyond Stock News: BBBY sinks 47% as management attempts Hail Mary with $1B equity sale

Bed Bath & Beyond (BBBY) stock dove more than 47% at the open on Tuesday after management chose to raise more than $1 billion in order to save the struggling home good retailer. Bed Bath & Beyond stock exploded 92.1% on Monday to $5.86. Now shares are trading closer to $3 as managment announced late Monday that it would be selling warrants that would allow buyers to purchase more than 95 million shares of common stock.

Bed Bath & Beyond stock news: One volatile week so far

Bed Bath & Beyond management announced it would issue 23,685 shares of Series A convertible preferred stock, warrants to purchase 84,216 shares of Series A convertible preferred stock and warrants to purchase 95,387,533 shares of BBBY common stock. This will present the company with $225 million. 

After that management claims it will receive a further $800 million in gross proceeds "through the issuance of securities requiring the holder thereof to exercise warrants to purchase shares of Series A Preferred Stock in future installments assuming certain condition are met. The Company cannot give any assurances that it will receive all of the installment proceeds of the Offering."

That is a fairly convoluted way of saying that the company will definitely receive $225 million and will maybe receive another $800 million in the future. All the proceeds are meant to pay down revolving lines of credit. 

The company has been shedding revenues and its footprint for years, but it has been widely known that the company was teetering on the edge of bankruptcy since the beginning of 2022. Just recently Bed Bath & Beyond admitted that JPMorgan had begun asking for its loans back and that it did not have the cash ready to fulfill the obligation.

In mid-2022 meme stock empresario Ryan Cohen entered the picturing by buying a bunch of stock and call options and persuading the board to fire former CEO Mark Tritton. CEO Sue Gove then took over, but Cohen jettisoned the ship after he saw it did not magically right itself due to his enthusiasm. Of course, he made out like bandit, while BBBY stock took down much of the retail class that had followed him in.

Of course, the legions of fans returned though. BBBY was only on Monday experiencing the euphoria of a meme stock rally. Shares traded up as much as 120% on Monday as retail traders attempted a short squeeze. More than 50% of Bed Bath & Beyond's shares were held short at last check.

Fellow meme stars AMC Entertainment (AMC) and GameStop (GME) are also trading lower alongside BBBY on Tuesday after experiencing rallies in January. AMC stock has shed 7% early Tuesday, and GME stock is down more than 10%.

Bed Bath & Beyond stock forecast

For a stock down by nearly half, the BBBY daily chart sure looks decent in the short term. We have ascending trendlines on both the top and bottom sides, and the Moving Average Convergence Divergence (MACD) indicator remains crossed over in a bullish fashion. Additionally, despite the heavy discounting at the opening on Tuesday, BBBY's stock price has been steadily moving higher. It could be that BBBY's retail fans realized that the additional shares only matter to fundamental investing. Maybe they are remembering that the magical thinking of meme analysis knows no bounds.

BBBY daily chart