Bed Bath & Beyond soars 85% after retailer warms to GameStop Chairman Ryan Cohen's proposal to sell the company
- Bed Bath & Beyond stock soared as much as 85% on Monday after GameStop Chairman Ryan Cohen took a 9.8% stake in the company.
- Cohen urged the retailer to explore a sale of the company and a spinoff of its Buybuy Baby division.
- Bed Bath & Beyond said it would review the letter and hopes to "engage constructively around the ideas."
Ryan Cohen re-ignited the meme-stock mania in Bed Bath & Beyond on Monday after his RC Ventures revealed a 9.8% stake in the retailer and urged it to explore a sale of the company.
Shares of the home furnishings chain surged as much as 85% in Monday trades, creating a swift $127 million in paper profits for Cohen, as his stake that was worth about $150 million on Friday turned into just over $275 million.
He is the chairman of GameStop and is largely seen as responsible for lighting the match that ignited the meme-stock madness of early 2021, in which shares of GameStop stock soared from about $5 to as high as $483.
"The issue at Bed Bath is that its highly publicized and scattershot strategy is not ending the tailspin that has persisted before," Cohen said in a letter to Bed Bath & Beyond's board of directors.
He suggested that the retailer spin off its Buybuy Baby division, and even explore a sale of the entire company to a private buyer. Selling itself could allow Bed Bath & Beyond to be more flexible, deliver a significant return for shareholders, and increase its cash while decreasing its costs, according to Cohen.
The board of Bed Bath & Beyond responded to his letter without hostility, and instead seemed receptive to the idea of working with Cohen to generate more value for shareholders.
"While we have had no prior contact with RC Ventures, we will carefully review their letter and hope to engage constructively around the ideas they have put forth. Our Board is committed to acting in the best interests of our shareholders and regularly reviews all paths to create shareholder value," the management team at Bed Bath & Beyond said.
The company added that it is still in the early innings of a multiyear transformation plan, which it still believes will create long-term shareholder value.
After Cohen acquired a large stake in GameStop in late 2020, the co-founder of Chewy.com joined GameStop's board of directors and initiated a turnaround plan of turning the physical video-game retailer into a specialized e-commerce company.
Whether Cohen sees similar success with Bed Bath & Beyond remains to be seen. Shares of Bed Bath & Beyond are down 15% over the past year when accounting for Monday's surge, and are up 64% year-to-date.