BBBY (Bed Bath & Beyond) – What Gives?

Disclosure: I hold a modest long position in this ticker, currently underwater by about 25%, no biggie.

I opened my BBBY position in March 2022 when Ryan Cohen (he of Chewy and GameStop fame) bought his 9.5M BBBY shares for a ~10% stake in the company and then engaged in a very aggressive social media campaign against the company's executives and its “over price consultants”. Ultimately, Cohen was able to secure 3 Board seats on the company for his hand-picked associates, and now has quite a bit of sway regarding the company's future:

• https://www.cnbc.com/2022/03/25/bed-bath-beyond-strikes-deal-with-activist-investor-ryan-cohen.html

BBBY is now trading at about a 0.11x price-to-sales ratio, and Ryan Cohen has announced that he thinks the profitable BuybuyBaby chain should be sold off (for several times more than the company's current market cap) in order to erase BBBY's debt and narrow the parent company's scope. This idea has some merit to it, and has been discussed before:

• https://www.cnbc.com/2020/06/26/buybuy-baby-may-be-worth-more-than-all-of-bed-bath-beyond-bank-of-america-says.html
• https://www.marketwatch.com/story/bed-bath-beyonds-baby-business-isnt-worth-multiple-billions-analysts-say-contradicting-ryan-cohen-letter-11646676679

Currently, BBBY is trading at around $8, with a paltry $650M market cap, against annual revenues of approx. $8bn in 2021. It historically has traded as high as $80 (2013-2015) and even $44 in 2021 (June 2, 2021). BBBY has also bought back $1bn worth of its shares in recent years, and clearly considers its own share price to be very undervalued:

• https://bedbathandbeyond.gcs-web.com/news-releases/news-release-details/bed-bath-beyond-inc-advances-1-billion-three-year-share

In addition to buying 9.5M shares between $13-17 (~$150,000,000), Cohen also purchased a ton of Jan 2023 Calls (16,701 contracts) with $60-$80 strike prices:

• https://www.thestreet.com/memestocks/other-memes/bbby-stock-ryan-cohen-steps-in-short-sellers-scramble

Ryan Cohen has been very vocal on his Twitter account since the New Year regarding inflation, monetary policy, and the Fed. He clearly has more than a passing knowledge of, and interest in, the current state of the economy. Of course, no mention of BBBY and Ryan Cohen would be complete without mentioning the short interest in the ticker (20M shares publicly reported short, or 25% of total shares outstanding. But somehow 84% of the float according to Yahoo Finance??!) and the stock's weird trading correlation with other so-called “meme stocks” like GME, AMC. For example, BBBY had a huge price and volume spike on June 2, 2021, the same day that GME and other meme stocks also experienced massive price spikes and trading. However, I will leave aside speculation as to what that correlation might be caused by, or what it imply for the future of the share price.

I keep struggling to think of any reason why a successful activist investor like Ryan Cohen would drop that kind of dough without a very serious plan to turn the company around, even in this difficult economic climate.

Is anyone else fascinated with this stock's future and curious to see how it all shakes out? Will Ryan Cohen's 17,000 Jan 2023 options contracts “print”, or will his bet end up on WSB's loss porn hall of fame?

I am very curious to hear other people's take on this stock!