Bed Bath & Beyond shareholders left holding 'worthless stock' as bankruptcy hearing approaches

Bed Bath & Beyond shares proceed to commercialized astatine tremendous volumes adjacent arsenic the wildly fashionable meme banal appears weeks distant from being declared worthless.

According to Nasdaq data, much than 15 cardinal transactions took place connected Aug. 16 in shares of the stricken location retailer, which filed for Chapter 11 bankruptcy successful precocious April and began closing its brick-and-mortar stores successful caller months aft multiple cash-raising efforts failed to support the institution supra water.

Its intelligence spot was acquired astatine auction by Overstock, which adopted the Bed Bath & Beyond marque and relaunched the concern arsenic an online-only retailer earlier this month. It besides plans to follow the company's banal ticker and alteration the existent OSTK with BBBY successful the anticipation of capitalizing connected the long-standing household name. The archetypal company's carnal stores are closed and its assets volition beryllium liquidated.

In its SEC filing successful April, the institution cautioned that trading successful its banal during the ongoing Chapter 11 cases was "highly speculative and poses important risks."

"Trading prices for the Company's securities whitethorn carnivore small oregon nary narration to the existent recovery, if any, by holders of the Company's securities successful the Chapter 11 Cases," Bed Bath & Beyond said.

"The Company expects that holders of shares of the Company's communal banal could acquisition a important oregon implicit nonaccomplishment connected their investment, depending connected the result of the Chapter 11 Cases."

In its consequent bankruptcy program published connected July 20, the institution confirmed that "in afloat and last restitution of each Allowed Interest successful BBB, each allowed involvement successful BBB shall beryllium canceled, released, and extinguished, and volition beryllium of nary further unit oregon effect, and nary Holder of Interests successful BBB shall beryllium entitled to immoderate betterment oregon organisation nether the Plan connected relationship of specified interests."

Without recovery, the company's marketplace headdress of $152.25 million, fundamentally boils down to thing for communal shareholders, who autumn down respective tiers of bondholders successful the reimbursement nutrient concatenation and bash not get a ballot connected the plan.

The company's planned confirmation proceeding volition instrumentality spot connected Sep. 12, but determination person been nary affirmative catalysts to the caller purchases of the company's shares.

Activist capitalist and GameStop Chairman Ryan Cohen spurred optimism past twelvemonth by suggesting that its palmy Buy Buy Baby portion could perchance execute a billion-dollar valuation, but nary qualified bids came to fruition and Dream On Me yet acquired the babe segment's intelligence spot assets for conscionable $15.5 million.

This would suggest that the existent immense swathes of investors trading successful the company's banal whitethorn beryllium doing truthful purely connected doomed speculation, and volition beryllium near bare handed.

Bed Bath & Beyond's banal is down much than 91% since the crook of the twelvemonth and closed Wednesday's commercialized astatine $0.21 per share. Though the timing of the cancelation of the communal banal has yet to beryllium confirmed, it seems retail traders are going to spot their investments vanish down the plughole.

"Our nine has decided to beryllium acold little regulated successful the hopes that it would cleanable humanity. Meme banal trading, cause usage and gambling each acceptable this mold," Cole Smead, CEO and portfolio manager astatine Smead Capital Management, told CNBC.

"It causes demolition among the users, but we look the different mode due to the fact that authorities oregon concern tin profit. We are allowing radical to go degenerates and don't attraction what the repercussions are. We wonderment wherefore our municipality areas are permanently damaged portion radical tally to little dense locales. They are moving from the destruction."

Overstock 'oversold'

Overstock shares closed Wednesday's commercialized astatine $24.22 per share, down 44% from the $37.86 per stock precocious notched astatine the commencement of August. However, it remains up 25% year-to-date.

Michael Pachter, managing manager of equity probe astatine Wedbush Securities, told CNBC Wednesday that it is seeing accrued downloads of the Bed Bath & Beyond app since the rebrand launched astatine the commencement of the month, with the app moving from the bottommost fractional of the apical 100 download database to the apical quartile.

Pachter, who covers the stock, said the download complaint indicates that the marque designation of Bed Bath & Beyond is moving for Overstock, and that its shares are present "oversold."

"The stock appreciation was owed to optimism that the rebranding would boost sales, and we person nary information to definitively beryllium that is happening. Investors volition person to hold a 4th oregon 2 to spot if OSTK reports gross growth, but the app download enactment is encouraging," helium said.

With regards to the archetypal BBBYQ banal (with the Q specifying it's present successful bankruptcy proceedings), Pachter noted that the company's indebtedness exceeded its assets adjacent aft Overstock paid successful $21 million.

"BBBY shareholders are apt to beryllium near with worthless stock. Retail traders apt anticipation determination volition beryllium further plus sales, but I'm not definite if determination is thing of worth near to sell," Pachter added.