This week witnessed a series of events that defines the meme stock skullduggery. The centerpiece of this tale is Bed, Bath and Beyond (BBBY) — aka Blood, Bath and Bankrupt — a plaything of Reddit meme stonks, river boat gamblers and dubious self-proclaimed activist shareholders.
Such an “activist” is one Ryan Cohen (aka RC Ventures), a tribe member involved in other meme stocks, such as GameStop. Cohen disclosed a 12.9% stake in GameStop, making him the company’s biggest individual investor. According to these filings, Cohen’s firm, RC Ventures, has expressed willingness to get more involved with the company in order “to produce the best results for all shareholders.” As such, when this “meme lord” pied piper files a securities action, the meme gamblers follow in droves.
I’m sick of seeing failed executives make millions in risk free compensation while shareholders are left holding the bag
— Ryan Cohen (@ryancohen) June 29, 2022
On Tuesday, August 16, following days of gradual but persistent short squeezes similar to what happened in January 2021, BBBY exploded higher as retail meme traders piled into the stock, encouraged by news that Ryan Cohen placed another bet and a 10% stake on the struggling retailer.
According to Vanda research, retail traders poured a torrent of cash into Bed Bath & Beyond’s shares in recent weeks, even with the company’s financial situation collapsing. They bought $58.2 million of the stock on Wednesday, a day after snapping up a record $73.2 million. Net purchases over three weeks totaled $229.1 million.
As the above chart illustrates, BBBY bonds were signaling something was seriously wrong, yet the meme cowboys (aka Apes) drove the stock up to $30. The stonk traded one billion shares during the week.
Within two days, Cohen dumped the pump, pocketing a $68-million profit in the process. The stock in the subsequent rug-pull tumbled to $10 at the close Friday.
this is what’s so perplexing. It makes me think he has some other trick up his sleeve. Who knows tho, he may have just fucked us all over.
— Cáel (@Kawala_) August 20, 2022
.@ryancohen with 3 hand-picked board members on $bbby…
…not only gotchas retail traders, but sells moments ahead of disclosures of hiring bankruptcy firm and being behind in payments with suppliers.
— Dirk Haussecker (@RNAiAnalyst) August 20, 2022
But the Last Standers continue living in their magical world.
Ryan Cohen if you are reading superstonk, please know that we believe in you! via /r/Superstonk #investing #stocks #fintwit #superstonk https://t.co/Vw2FahZN0D
— r/Superstonk 🐒💎✋🚀 (@InvestorReddit) August 20, 2022
— VT6696 (@vt6696) August 20, 2022
Then, after the close Friday and following the news that Cohen had flipped all his shares (and sold all his calls), Bed Bath & Beyond was battered by more bad news after Bloomberg reported that some suppliers are restricting or halting shipments altogether after the home-goods retailer fell behind on payments, according to people familiar with the matter.
The retailer has previously said it’s struggling with cash and inventory optimization, and ordering missteps appear to have left it with a glut of goods that will have to be sold at markdowns.
Several of the firms that provide credit insurance or short-term financing to vendors have revoked coverage of Bed Bath & Beyond, drastically complicating the company’s scramble for liquidity.
Hat tip to Zero Hedge for timely and persistent reporting on the skullduggery. Another characteristic of this tawdry tale was the denial and magical thinking of the fintwit apes and especially their disbelief even as other mainstream financial media finally started breaking the story after the close on Friday. In Zero Hedge’s twitter feed were numerous tweets like this:
Cite your sources or continue to discredit
— james farrell (@SelfFarrell) August 19, 2022
Hanging on by the thread of that ABL revolver. How the lenders allowed share repurchases as recent as 5/28/22 is beyond (heh) me.
— Mark Woodworth (@mark_woodworth) August 19, 2022
The Fintwits Apes ride Blood, Bath and Bankrupt
— HFI Research (@HFI_Research) August 20, 2022
But to be clear, some big institutions (not just wild retail) with fiduciary responsibility were playing this meme.
Among the apes was a 20-year-old student, one Jake Freeman, who gambled a stake secured from his wealthy family to parlay into a five-plus bagger during the insanity ramp phase. Really?
Jake Freeman, a 20-year-old student, made $110 million trading meme stock $BBBY.
He was able to do it with just a small initial capital of $25 million from his family. pic.twitter.com/sV7Nf5KF1o
— Fintwit (@fintwit_news) August 18, 2022
Former SEC (aka Suck Elon’s Cock) chair Harvey Pitt discusses whether an investigation into fraud and market manipulation is coming. He says yes, but we will see if this fades into the sunset with loot pocketed.