Meme stocks BBBY, AMC. CINE and more all took a tumble recently. What’s next?
On Monday, UK-based Cineworld (CINE.L) warned of the possibility of bankruptcy, news that drove AMC Entertainment Holdings’ shares down by nearly 40% at 10.93. This occurred on the same day that the U.S. movie chain’s preferred shares began trading publicly. The news sent a shockwave through the market, with a clutch of stocks favored by retail traders tumbling in volatile trading. The situation is fluid and the market is sure to be volatile in the days and weeks ahead as investors digest the news and try to assess the impact on the industry.
Bed Bath & Beyond shares slumped 6.4% in premarket trading on Tuesday after AMC’s stock plunge. The home goods retailer has been struggling to revive sales and avoid irrelevance amid the pandemic. GameStop Corp shares also slid after AMC’s stock drop. The videogame retailer has been trying to reinvent itself as a digital focused company. AMC’s preferred stock, trading under the ticker “APE”, opened at $6.21 on the New York Stock Exchange. AMC has plans to raise $500 million through a rights offering of common stock to help shore up its finances and reopen its theaters when it is safe to do so.
About Bed Bath and Beyond (BBBY)
Bed Bath and Beyond is one of the largest home furnishing retailers in the United States. The company was founded in 1971 and today operates over 1,000 stores across the country. Bed Bath and Beyond specializes in a wide range of home goods, including bedding, bath products, kitchenware, home décor, and more. In addition to its retail stores, the company also operates an online store and a mobile app.
Is BBBY a buy? Current financials
It’s been a rough few days for BBBY stock. After Ryan Cohen’s RC Ventures dumped 8 million shares, the stock price has taken a nosedive. Prices have ranged from $18.68 to $29.22, and the company is taking heat for its financials. In June, it was revealed that revenue had crashed by 25% to about $1.46 billion. Per-share losses were $2.83, which was $1.44 more than what analysts had predicted. Worst of all, same-store sales were down by 24%.
In the most recent quarter, the company said that it had about $107.5 million in cash and equivalents on hand. However, its total liabilities have also risen to over $5.17 billion. This includes $1.5 billion in capital leases and $1.38 billion in long-term debt. Needless to say, it’s been a tough few days for BBBY stock and other meme stocks.
Why is BBBY stock going down?
As sales and profitability decline, BBBY’s debt has become increasingly difficult to manage. Slipping sales and high inflation rates make it likely that BBBY’s stock price will drop down further and the company will go bankrupt.
Its current business model is not sustainable, and the company has been slow to adapt to changes in the retail landscape. In addition, It faces stiff competition from other retailers, both online and brick-and-mortar. As a result, it is possible that it will not be able to survive in its current form. However, if the company can successfully restructure its debt and implement a new strategy, it may be able to turn around its fortunes. Only time will tell if BBBY will be able to make a comeback.