Bed Bath & Beyond plunges after last-ditch effort to avoid bankruptcy

Bed Bath & Beyond plunges after last-ditch effort to avoid bankruptcy

(Reuters) – Shares of Bed Bath & Beyond Inc fell more than 30% in premarket trading on Tuesday after the retailers plans to raise about $1 billion through an offering failed to convince investors the company could avoid bankruptcy.

The additional capital would offer the troubled home goods chain a short window of only a few quarters to revive the business, Wall Street analysts said, adding that a weakening economy would diminish any chance of a successful turnaround.

“Unfortunately, we see a low probability that the company will be able to raise equity and view this as a ‘last gasp’ before filing for bankruptcy protection,” Wedbush analyst Seth Basham said.

Reuters reported late last month Bed Bath & Beyond was preparing to seek bankruptcy protection and had lined up liquidators to close additional stores unless a last-minute buyer emerged.

Bed Bath & Beyonds shares closed more than 92% higher in the last session on interest from retail traders. The shares were trading at $4.05 and were among the most discussed on stockstwits.com on Tuesday.

A part of the meme stock phenomenon, Bed Bath & Beyond stock surged to as high as $30 in August when activist investor Ryan Cohen took a stake in the company and pushed for changes.

“It‘s like a cat with nine lives and we’ll see if they can take this lifeline and turn the company around. But were not holding our breath,” said Thomas Hayes, chairman and managing member at equity manager Great Hill Capital LLC.