Troubled retailer Bed Bath & Beyond filed for bankruptcy in the spring. Bed Bath & Beyond stock has been delisted but can still be traded OTC, where it is popular. However, an analyst warns that the papers will soon be worth nothing.
• Bed Bath & Beyond officially files for bankruptcy – Overstock secures trademark rights
• Still millions of transactions in Bed Bath & Beyond shares in OTC trading after delisting
• Wedbush analyst warns: Shareholders may soon be left with “worthless shares”.
It had been apparent for months, but in April it became a certainty: the US retailer Bed Bath & Beyond was unable to turn around despite austerity measures and the sale of shares and officially filed for bankruptcy.
Overstock acquires Bed Bath & Beyond brand
Then, in late June, online furniture and home furnishings retailer Overstock.com announced it had completed the acquisition of the Bed Bath & Beyond brand and other intellectual property. The original company’s physical stores will be closed and its assets liquidated. Overstock has relaunched the Bed Bath & Beyond business as an online-only retailer. In the meantime, the Bed Bath & Beyond domain has been relaunched in Canada, followed by the relaunch of an updated website, mobile app and loyalty program in the USA at the beginning of August. As CNBC reports, there are also plans to take over the company’s stock ticker and change the current OSTK to BBBY. Overstock and new Bed Bath & Beyond CEO Jonathan Johnson believes that a “combination of the strengths of Overstock’s operating model and the Bed Bath & Beyond brand […] will create a powerful synergy,” according to a press release from Overstock. “I’m excited for consumers to experience the new Bed Bath and an even bigger and better Beyond.”
Bed Bath & Beyond stock delisting – Investors continue to trade OTC
Following the bankruptcy, Bed Bath & Beyond announced on April 25 that it was notified by Nasdaq’s Listing Qualifications Department that the company’s common stock would be sold due to “commencement of a voluntary proceeding under Chapter 11 of the United States Bankruptcy Code” on April 3. be delisted in May. However, the Bed Bath & Beyond share can still be traded OTC (Over-The-Counter) and enjoys great popularity.
As CNBC reports, more than 15 million transactions in Bed Bath & Beyond stock took place as of Aug. 16, according to Nasdaq data, even though the company warned in its SEC filing in April that trading in the shares could take place during the ongoing settlement “is highly speculative and harbors considerable risks”. “The trading prices of the company’s securities may have little or no connection to the actual recovery, if any, by the company’s security holders in the Chapter 11 cases,” CNBC quoted Bed Bath & Beyond as saying. The company warned that “depending on the outcome of the Chapter 11 cases, holders of the company’s common stock could suffer a substantial or complete loss of their investment.”
In the bankruptcy plan, released in July, the company confirmed that “upon the full and final satisfaction of all allowable interests in BBB, all allowable interests in BBB shall be cancelled, released and extinguished and cease to have any further force or effect and shall cease to be a holder of interests in BBB is entitled to a reclaim or distribution under the plan as a result of those interests.” Since common shareholders would lag behind several tiers of bondholders in the redemption chain and would not be able to vote on the plan, the market cap, which currently stands at $193.61 million (as of 09/04/2023), becomes practical for them without a recovery fall to zero. The company’s scheduled confirmation hearing will take place on September 12.
Analyst: Bed Bath & Beyond shareholders with ‘worthless shares’ – Overstock stock oversold
Since the start of the year, when the paper was still US$ 2.31 at times, the Bed Bath & Beyond share has lost more than 89 percent in value and was last listed in OTC trading at US$ 0.2620 (as of: closing price from 01.09.2023).
Overstock stock had hit a high of $39.27 in early August, but has since lost about 32 percent. Nevertheless, this year the stock on the NASDAQ has already gained around 37 percent to 26.54 US dollars (as of the closing price on September 1st, 2023).
Wedbush analyst Michael Pachter told CNBC that there has been a surge in downloads of the Bed Bath & Beyond app since the rebrand rolled out in early August. In his opinion, the download rate shows that Bed Bath & Beyond’s brand awareness is working for Overstock and that Overstock stock is now “oversold.” “The rise in stock was driven by optimism that the rebranding would boost revenue, and we don’t have any data to definitively back that up. Investors will have to wait a quarter or two to see if OSTK is reporting revenue growth, however app download activity is encouraging,” reports CNBC Pachter.
Pachter reiterated his buy rating on Overstock stock in late July. His price target for the paper is 43 US dollars and thus around 64 percent above the current share price. A total of six analysts at TipRanks have rated Overstock shares in the past three months – two of them recommend buying the stock, four gave a “hold” recommendation. The average price target is slightly below Pachter’s at $42.50, giving Overstock stock upside potential of 60.14 percent.
However, Pachter sees no chance for the original Bed Bath & Beyond stock. According to the analyst, the company’s debt — even after Overstock paid $21.5 million for its Bed Bath & Beyond brand and other intellectual property — exceeded its assets. Therefore, according to Prachter, Bed Bath & Beyond shareholders are “probably left with worthless shares”.
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