The doomsday clock has been ticking for Bed Bath & Beyond (OTCMKTS:BBBYQ) for months, but now the countdown to destruction has begun. As the unstable meme stock has trended downward, retail investors have once again proven that they don’t know when to jump ship. The struggling retailer declared bankruptcy and was delisted from the Nasdaq in April 2023, only to reappear on an over-the-counter (OTTC) exchange. Through it all, stubborn investors have stood by BBBYQ stock, pushing for a short squeeze and ignoring the writing on the wall.
Now shares are rising today on news that Buybuy Baby, the company’s last valuable asset, has an interested buyer. On top of that, a prominent e-commerce leader wants to acquire Bed Bath’s intellectual property ().
The retailer hasn’t commented on either deal yet, but one thing is certain; the vultures are closing in on what remains of Bed Bath & Beyond, and they are hungry. Let’s dive deeper into what this means for investors.
What’s Happening With BBBYQ Stock
This week brings an important catalyst for BBBYQ stock. June 8 marks the company’s stalking horse bid, a chance for outside investors to take control of the company. Last week, the anticipation of potential offers pushed shares up as investors speculated that either Ryan Cohen or Carl Icahn might seize the opportunity to purchase the company on the cheap. Unfortunately, neither one has expressed any interest, and nothing indicates they will. While momentum for the critical deadline is likely pushing the stock up today, the momentum won’t last.
Across the country, Bed Bath retail locations have been hosting going-out-of-business sales as they prepare to close their doors. Now it is more clear than ever that operations are winding down, just as the company said it would when it filed for Chapter 11 bankruptcy.
According to the Wall Street Journal, Go Global Retail is set on acquiring Buybuy Baby, while Overstock.com (NASDAQ:OSTK) has expressed interest in purchasing the chain’s IP. If it were to successfully acquire it, the outlet’s sources indicate that Overstock would shut down all remaining Bed Bath & Beyond locations. Buybuy Baby, on the other hand, would remain fully operational were it to be sold to Go Global Retail.
Even if Bed Bath & Beyond were to have a second life as a brand sold at a discounted rate on Overstock.com, it wouldn’t save BBBYQ stock. At this point, there can be no doubt that the company has failed. Not only that, but the attempts by the r/WallStreetBets crowd to create another short squeeze have failed as well, leaving a once popular company in the ashes of a shifting economy. Buybuy Baby could certainly live on under better leadership, but Bed Bath & Beyond will ultimately be nothing more than a name that older shoppers remember semi-fondly.
Why It Matters
While it makes sense for a buyer to want to acquire Buybuy Baby, the case for Bed Bath’s IP is much less strong. This means that Overstock will likely only purchase it at a heavily discounted rate, which won’t help BBBYQ stock. As InvestorPlace contributor Josh Enomoto notes:
“Unfortunately, the value of Bed Bath and its underlying intellectual property is ambiguous. Per the company’s most recent quarterly securities filing, management disclosed that the ‘intangible value of trade names and trademarks was just $13.4 million.’ On the other end of the scale, court filings from late November reveal that Bed Bath held about $4.4 billion in assets and $5.2 billion in debts at the time.”
As the stalking horse bid approaches, investor confidence in Bed Bath is likely to keep declining while the stock does the same. This company is moving closer and closer to its deathbed. The case to bet against it is only getting stronger with each trading day and will only keep increasing as the final deadline approaches.
On the date of publication, Samuel O’Brient did not have (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.