[Asia Economy New York=Special Correspondent Joselgina] Bed Bath & Beyond, a U.S. household goods retailer that surged over 460% this month alone, signaling the revival of 'meme stocks,' is now plummeting sharply.
On the 18th (local time) at the New York Stock Exchange, Bed Bath & Beyond closed the regular session at $18.55, down 19.63% from the previous close. As of 7:23 PM Eastern Time, in after-hours trading, it plunged about 44%, sliding to around the $10 per share level.
Bed Bath & Beyond recently became a hot stock among individual investors, fueled by word of mouth on online communities such as Reddit. On the 16th, it surged 70%, and the previous day it closed the regular session up 11.77% at $23.08. Considering it was about $5 per share at the end of last month, it has risen more than 460% this month alone. During this process, the trading volume is estimated to be around 1.3 billion shares. According to FactSet, the trading volume on the 16th alone was about 400 million shares.
However, the mood reversed starting from after-hours trading the previous day. Activist investor Ryan Cohen, who has significant influence on Reddit, ignited the sell-off. News broke that Cohen reported to the U.S. Securities and Exchange Commission (SEC) that he would sell all 9.45 million shares held through RC Ventures, causing a double-digit drop.
This rollercoaster came shortly after the stock soared on news that Cohen had purchased call options betting on a price increase, followed by the announcement of his selling plan. In particular, Bed Bath & Beyond’s ongoing struggles with declining profits and worsening liquidity added to the selling pressure. The market had long expressed concerns that Bed Bath & Beyond was overvalued. Many also compared it to GameStop, the symbol of last year’s meme stock craze.
The Wall Street Journal (WSJ) reported that Cohen made about $60 million in profits from this stock sale.
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