In June 1867, over 700 U.S. troops led by Lieutenant Colonel George Armstrong Custer were soundly defeated by the Lakota Sioux and allied Native American tribes in the legendary Battle of Little Big Horn, also known as Custers last stand. Its rare to hear Wall Street analysts reference 19th-century history, but Loop Capital managing director Anthony Chukumba believes that is something like what were seeing with Bed Bath & Beyond this holiday season.
This really was Custers last stand, and its going to pretty much end the same way that it did for Custer, he told Yahoo Finance on Wednesday. We will not be having this same conversation a year from now about Bed Bath & Beyond. Bed Bath & Beyond will be gone. Of course, Custer did not survive Little Big Horn, as depicted in countless books and adaptations, such as Son of the Morning Star.
If Bed Bath & Beyond does end up going bankrupt, it definitely wont have gone out quietly. The company became a so-called meme stock in 2021, soaring on the back of interest from retail investors who came together to discuss trades on Reddits r/wallstreetbets.
After the initial surge in Bed Bath & Beyonds stock in 2021, activist investor and Chewy co-founder Ryan Cohen bought millions of shares of the retail crowds favorite and became the chairman of the boardraising hopes among investors that he would turn it around.
Shares of the home goods retailer spiked nearly 800% between their 2020 COVID-induced lows and their 2021 meme stock peak, boosted by Cohens investment and active involvement. Some traders made millions in the processa 20-year-old USC student even netted $110 millionbut all the while, the company struggled to turn a profit.
Bed Bath & Beyond lost $559 million in the fiscal year that ended in February and more than $700 million in the fiscal first and second quarters of this year combined, SEC filings show.
Cohen sold his entire stake in a surprise move in August, pocketing $68.1 million in profit and triggering the largest-ever intraday decline for the stock. Shares of the company are down more than 84% year-to-date, and over 93% since their 2021 peak above $35 per share.
After Cohen sold his shares, both he and Bed Bath & Beyonds then-CFO Gustavo Arnal were accused of operating a pump and dump scheme that artificially inflated the value of Bed Bath & Beyond stock in the U.S. District Court for the District of Columbia.
Weeks later, Arnal jumped to his death from Manhattans iconic Jenga skyscraper, leading to calls for an SEC probe into Cohens potential scheme to increasewith former SEC chair Jay Clayton saying the regulator would likely look into Cohens timely exit.
But for investors, Loop Capital managing director Anthony Chukumba had a clear message:
We dont have to go through all the things that have happened with Bed Bath & Beyond, all you need to know is that theyre just simply not relevant anymore.
Chukumba has been bearish on Bed Bath & Beyond for over a year now. In June, he called the companys earnings report a dumpster fire, warning that it was burning through cash and inventories were rising.
And in August, he said the stock was headed to $1 per share as their business had no forward momentum and would need to raise $500 million just to settle its current debts and continue operating. This holiday season just reinforced his belief.
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