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The
billionaire investor disclosed on Thursday he had sold his 9.8%
stake in the struggling home goods retailer, almost five months
after amassing it and pushing for changes. In response, the
company ousted its chief executive, changed some board directors
and agreed to explore shedding its baby products unit.
Cohen stands to earn a profit before taxes of between $55
million and $60 million on the stock sale, according to a
Reuters review of regulatory filings and a person familiar with
the matter.
Cohen did not offer a reason for the u-turn and did not respond
to requests for comment. He built a following last year of loyal
individual investors who bet on his turnaround of video game
retailer GameStop Crop, some of whom expressed fury and
disbelief after they followed his lead on Bed Bath only to see
him abruptly cash out.
Cohen sold his Bed Bath stock on Tuesday and Wednesday after it
rose 300% in August amid a speculative rally in meme stocks, a
popular reference to shares traded by investors mostly based on
hype in social media rather than their economic fundamentals.
Bed Bath & Beyond shares, which briefly hit $30 this month,
finished Thursday at $18.55, falling 20% after filings revealed
Cohen planned to sell his shares. It plunged another 44% in
after-hours trading after filings showed that he had sold all of
his shares.
Ryan Bennett, a 43-year-old agriculture worker in Beloit,
Wisconsin, told Reuters he lost more than $40,000 because he
followed Cohen in buying Bed Bath shares.
"I feel I took my hard-earned money out of my pocket and put it
right into Cohen's," Bennett said.
Bed Bath said in a regulatory filing on Thursday it was working
with external financial advisors and lenders on strengthening
its balance sheet, an admission that it needs to raise capital
to stay afloat. The company had a mountain of long-term debt
totaling $1.38 billion and only $107.5 million in cash as of the
end of May, according to its most recent financial disclosure.
The investor reaction raises questions over whether Cohen will
continue to exert strong influence over meme stock loyalists. On
Wallstreetbets, the Reddit forum frequented by such investors,
some lamented their losses and Cohen's role.
"After reading what Ryan Cohen just did, I hope you all
understand that he is not one of us," one of the posters that
goes by the name of Ronpm111 wrote.
Shares of GameStop, in which Ryan holds a 12% stake and serves
as chairman, have dropped 20% since he disclosed his Bed Bath
stock sale. This raised questions among many investors,
including Bennett, over whether Cohen's stock sale at Bed Bath
will weigh on GameStop's status as a meme stock.
"I don't know if I can trust him to hold a stake in GameStop.
I'll probably be looking to exit that," Bennett said.
(Reporting by Krystal Hu and Angelique Chen in New York and Svea
Hebst-Bayliss in Rhode Island; Editing by Greg Roumeliotis and
Jacqueline Wong)
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