Ryan Cohen’s $60M U-turn in Bed Bath Sparks Wrath of Meme Stock Investors

An exterior view shows a Bed Bath & Beyond store in Novi, Michigan, U.S., January 29, 2021. REUTERS/Emily Elconin

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Aug 19 (Reuters) – Investors flooded social media platforms like Reddit on Friday with criticism of Ryan Cohen’s sale of his stake in Bed Bath & Beyond Inc. (BBBY.O)blaming him for helping fuel a meme stock rally only to later walk away with a $60 million profit.

The billionaire investor revealed on Thursday that he had sold his 9.8% stake in the struggling home goods retailer, nearly five months after amassing it and pushing for changes. In response, the company fired its CEO, changed some members of the board of directors and agreed to explore the possibility of ditching its baby products unit. read more

Cohen could make a pre-tax profit of between $55 million and $60 million from the share sale, according to a Reuters review of regulatory filings and a person familiar with the matter.

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Cohen did not offer a reason for the U-turn and did not respond to requests for comment. He garnered a following last year from loyal individual investors who bet on his takeover of video game retailer GameStop Corp. (GME.N)some of whom expressed fury and disbelief after they followed his lead in Bed Bath only to see him abruptly cashed out.

Cohen sold his Bed Bath shares on Tuesday and Wednesday after they surged 300% in August amid a speculative rally in meme stocks, a popular reference to stocks traded by investors based primarily on hype in stocks. social networks rather than its economic fundamentals.

Shares of Bed Bath & Beyond, which briefly hit $30 this month, ended Thursday at $18.55, falling 20% ​​after documents revealed Cohen planned to sell his shares. It plunged another 44% in after-hours trading after filings showed he had sold all of his shares. read more

The stock was on track to open 43% lower on Friday, erasing all gains for the week.

“The writing is on the wall that Bed Bath & Beyond stock has once again become disconnected from economic reality,” said Zachary Fadem, an analyst at Wells Fargo.

Ryan Bennett, a 43-year-old farmworker in Beloit, Wisconsin, told Reuters he lost more than $40,000 because he followed Cohen into buying Bed Bath stock.

“I feel like I took my hard-earned money out of my pocket and put it right into Cohen’s,” Bennett said.

Bed Bath said in a regulatory filing Thursday that it was working with outside financial advisers and lenders to strengthen its balance sheet, an admission that it needs to raise capital to stay afloat. The company had a mountain of long-term debt totaling $1.38 billion and just $107.5 million in cash at the end of May, according to his most recent financial disclosure.

The investor reaction raises questions about whether Cohen will continue to wield strong influence over meme stock loyalists. On Wallstreetbets, the Reddit forum frequented by those investors, some lamented their losses and Cohen’s role.

“After reading what Ryan Cohen just did, I hope everyone understands that he is not one of us,” wrote one of the posters bearing Ronpm111’s name.

Shares of GameStop, in which Ryan has a 12% stake and serves as chairman, have fallen 20% since he revealed his sale of Bed Bath shares. This raised questions among many investors, including Bennett, as to whether Cohen’s Bed Bath stock sale will influence GameStop’s status as a meme stock.

“I don’t know if I can trust him to have a stake in GameStop. I’ll probably look to get out of that,” Bennett said.

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Reporting from Krystal Hu and Angelique Chen in New York and Svea Hebst-Bayliss in Rhode Island; Additional reporting by Deborah Sophia in Bengaluru; Edited by Greg Roumeliotis and Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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