Bed Bath & Beyond shares fall after investor Ryan Cohen reveals intent to sell entire stake

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Signs mark a Bed Bath & Beyond store in Somerville, Massachusetts.
Brian Snyder | Reuters

Bed Bath & Beyond shares tumbled in extended trading Wednesday after activist investor Ryan Cohen said in a filing he intends to sell his entire stake in the retailer through his firm RC Ventures.

According to a Form 144 that was filed with the Securities and Exchange Commission, RC Ventures proposed selling 9.45 million shares of the company, which is the total amount it holds in Bed Bath. A Form 144 acts an official notice of a proposed security sale.

The aggregate purchase price of the 7.78 million shares directly owned by RC Ventures is roughly $119.4 million, excluding brokerage commissions, according to earlier SEC filings. And the aggregate purchase price of the firm’s call options exercisable into 1.67 million shares owned directly by RC Ventures is about $1.8 million, also excluding those commissions.

Call options give a buyer the right, but not the obligation, to purchase stock at a set strike price. Cohen’s options were for strike prices of $60, $75 and $80.

If Cohen hypothetically managed to sell all of his Bed Bath common stock at Wednesday’s closing price of $23.08, he’d net about $60 million, according to a CNBC calculation. Cohen’s hypothetical profits could may been larger if he also sold the options contracts.

Cohen first revealed he held a nearly 10% stake in Bed Bath through his activist firm in early March. FactSet says his holdings amounted to 11.82% as of late March.

At the time, Cohen, the GameStop chairman and founder of Chewy, wrote a letter to Bed Bath’s then-CEO, Mark Tritton, saying he believed the home goods chain was struggling to reverse market share declines and navigate supply chain woes. He also urged the retailer to consider selling its Buybuy Baby chain.

Later in March, Bed Bath said it struck a deal with the activist’s firm to add three people chosen by Cohen to its board of directors, effective immediately.

Just three months later, Bed Bath abruptly replaced Tritton as CEO in June, naming restructuring expert and independent director Sue Gove as his interim successor. This came after the company suffered another quarter of sluggish sales and heavy losses.

A spokeswoman for Bed Bath said that the retailer is “pleased to have reached a constructive agreement with RC Ventures in March and are committed to maximizing value for all shareholders.”

“Specifically, we have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet,” she said in an emailed statement, adding that the retailer will provide more information in an update at the end of the month.

A representative for RC Ventures didn’t immediately respond to CNBC’s request for comment.

More recently, Bed Bath has been facing liquidity issues, its coffers drying up ahead of the holiday season and during the back-to-school and back-to-college selling periods.

Bed Bath reported roughly $108 million in cash and equivalents in its fiscal first quarter, down from $1.1 billion a year prior. Its net losses swelled to $358 million from a loss of $51 million in the same period in 2021.

Still, the meme stock craze has found new life in recent weeks, and Bed Bath has been the primary beneficiary. As of Wednesday’s close, the stock was up 58% so far this year, easily outpacing the broader market.

Shares of the home goods retailer are up more than 300% in August alone, with heavy trading volume. The stock saw trading of nearly 400 million shares on Tuesday and another 249 million shares on Wednesday, according to FactSet.

Bed Bath has also been far and away the most mentioned stock on Reddit’s Wall Street Bets page over the past week, according to third party data provider Quiver Quantitative.

On Wednesday, after news of Cohen’s filing began to surface, users took to the Wall Street Bets page to emphasize that the Form 144 is only meant for giving notice about a proposal to sell.

User “foyerhead” said: “Ryan Cohen did not sell. FORM 144 is the ‘right’ to sell. It does not mean you are selling or have sold. If you own 10% or greater of a company, you have to file the form giving you the right to sell within the next 90 days.”

User “DeadSol” wrote: “Of course he didn’t sell. He’s an ape like us.”

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