Bed Bath & Beyond Inc. (BBBY -42.67%) is attempting to stave off bankruptcy with a proposed underwritten public offering of preferred stock and warrants that could raise more than $1 billion. The beleaguered retailer is defaulting on its loans and is warning that bankruptcy could be imminent. However, its stock price is surging, with shares up 133% to start the year.
Bed Bath & Beyond Inc. (BBBY) is in a desperate attempt to save the company from bankruptcy. The retailer recently missed interest payments on its bonds and is warning that bankruptcy may be imminent. Despite this, the company’s stock price has been on a roller coaster ride over the past six months, with shares hitting a 52-week low of $1.27 on Jan. 6th, with shares more than quadrupling since.
On Monday, Bed Bath & Beyond proposed an underwritten public offering of preferred stock and warrants to raise approximately $1 billion, a move that could help the retailer avert bankruptcy. The company plans to utilize the funds generated from the initial sale of the offering to pay off various existing loans.
The plan is a last roll of the dice from a company that is desperate to raise cash to provide some financial headroom to pay down debts and keep operations going, according to Neil Saunders, managing director at GlobalData. Bed Bath & Beyond also plans to use more cash buying back stock. In October 2020, the company pledged to repurchase $675 million in shares over three years. The timeline had been sped up and the figure had risen by November 2021, resulting in the repurchase of $1 billion shares being achieved within approximately one year. At the time, the retailer had a cash balance of approximately $600 million.
The stock is enjoying a sharp rise to start the year, despite the threat of bankruptcy. While Bed Bath & Beyond shares are up 133% to start the year, taking into account Monday’s gains, the stock was halted twice in afternoon trading Monday and racked up intraday gains upward of 130% before ending with a 92% gain. However, shares fell more than 30% in after-hours trading.
The company is also facing competition from other retail stocks such as GameStop and AMC, which have been boosted by a meme trading craze.
0. “What In The World Is Going On With Bed Bath & Beyond Shares? – Bed Bath & Beyond (NASDAQ:BBBY)” Benzinga, 7 Feb. 2023, https://www.benzinga.com/news/23/02/30762995/what-in-the-world-is-going-on-with-bed-bath-beyond-shares
1. “Bed Bath Beyond has a plan to avoid bankruptcy” CBS News, 7 Feb. 2023, https://www.cbsnews.com/news/bed-bath-beyond-stock-bankruptcy-plan-shares/
2. “Bed Bath & Beyond Has Nothing But Itself to Blame for Downfall” Yahoo! Voices, 6 Feb. 2023, https://www.yahoo.com/now/bed-bath-beyond-nothing-itself-140004464.html
3. “Bed Bath & Beyond stock surges in revenge of the meme stocks that lifts AMC” MarketWatch, 6 Feb. 2023, https://www.marketwatch.com/story/amc-stock-rises-14-amid-meme-stock-rally-01675716941