Once again, the future of Bed Bath & Beyond (OTCMKTS:BBBYQ) is hanging on a thread. Last month, the home furnishing retailer declared bankruptcy after months of closing stores and watching shares plunge. After delisting from the Nasdaq, the company began trading over-the-counter (OTC) as BBBYQ stock. Shares have been highly volatile ever since.
Today, BBBYQ stock is rising as anticipation mounts around its upcoming stalking horse bid, scheduled for June 1. Part of the driving force behind this is the possibility of noted meme stock investor Ryan Cohen using the opportunity to take over the troubled company. However, this doesn’t mean investors should be buying shares.
What’s more, even if Cohen does throw his hat in the ring, there’s no guarantee he’ll be able to make Bed Bath & Beyond profitable again. Here’s why investors should still avoid BBBYQ stock, regardless of who’s at the helm.
What’s Happening With BBBYQ Stock?
While Bed Bath & Beyond did start the trading day off well, it’s proving very volatile. As of this writing, BBBYQ stock is up about 9% for the day, at one point reaching as high as 27 cents.
The current trajectory doesn’t seem sustainable. That said, BBBYQ has also been climbing over the past five days as momentum builds for the fast-approaching June 1 deadline. InvestorPlace’s Eddie Pan explains:
“The deadline for debtors to select a stalking horse bid for some or all of Bed Bath’s assets has been set for June 1, moved from the original deadline of May 22. The stalking horse bid will set a low range of bids, meaning no one can bid below the stalking horse bid. This bid is also set in place before the actual auction and acts as a reserve bid.”
Pan also notes that buyers will have until June 7 to make a final bid. This represents an opportunity for Cohen to potentially swoop in and help stabilize Bed Bath, as he once did before.
It’s easy to see why the retail traders still placing ill-advised bets on this unstable meme stock are excited. However, they shouldn’t forget that Cohen also helped tank BBBY stock when he offloaded his entire share in August 2022. While Cohen walked away with a profit of $68 million, retail traders were left holding the bag. The stock only fell further from there, ultimately losing its place on the Nasdaq.
As much as some meme stock investors want to see Cohen as their savior, they shouldn’t ignore the past. The famous investor may have helped the company once, but that doesn’t mean he can or will do it again. And even if Cohen does take it over, Bed Bath’s problems could easily continue.
What Comes Next?
BBBYQ stock is likely to keep rising as the stalking horse bid deadline approaches. But for investors, this is still a time to be careful, not to jump in with both feet. There’s just too much instability hanging over this company for it to be a smart investment, even with the current price of around 25 cents per share.
Today’s superficial momentum is commonplace for meme stocks. Investors need to accept the fact that Bed Bath & Beyond is done and it won’t be coming back.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
