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Bed Bath & Beyond stock crashes after Ryan Cohen exit

Yahoo Finance Live anchors discuss Bed Bath & Beyond stock performance after activist investor Ryan Cohen completes his sale of shares.

Video Transcript

BRIAN SOZZI: Well, on that note, here are three things you need to know right now. Kicking off with the story of the week for our Yahoo Finance ecosystem. Shares of Bed Bath & Beyond are getting hammered in premarket trading, as Ryan Cohen's RC Ventures sold its entire position in the company. Cohen, also the chairman of GameStop, had about an 11.8% stake in the home goods retailer.

And Julie, it has been a bananas week for all things Bed Bath & Beyond. I have the full picture of this bananas week in a written story on our homepage. But still, Ryan Cohen essentially is sending this company-- or at least for right now-- right into the tank here. This is terrible.

JULIE HYMAN: Well, it's really-- it's a bit confusing, you know? If-- OK. So let's take--

BRIAN SOZZI: Break it down.

JULIE HYMAN: Let's break it down on its fundamental basis, right? Ryan Cohen took this position in the company, what, back in March. And he took the position as an activist, implying that he was going to push for changes to the company. And he did push for changes at the company.

He got three new board members approved. He said they should sell off buybuy BABY, which they have not yet done. So it looked like at that point, he was pushing for a fundamental case at the company. What has changed between now and then? As we know, the fundamentals have deteriorated significantly between then and now. But is it just that he doesn't think he can do anything to turn it around anymore?

BRIAN SOZZI: This-- all this does not pass the sniff test to me. First, I would say, I would question Ryan Cohen as an activist investor. When I think activist, I think what Elliot has managed to do at a company like PayPal. It's still unclear what Ryan Cohen is doing at GameStop and what real changes he drove at Bed Bath & Beyond.

Number two, why it doesn't pass the sniff test to me, Ryan Cohen has essentially, you would think, three besties or three friends on that Bed Bath & Beyond board of directors. That was what he got as part of a settlement when Bed Bath & Beyond. Now, Bed Bath & Beyond, now he's making these trades on the company. Something doesn't smell right. It's something I think we all need to be digging into a little bit more.

But nonetheless, it's been a wild and very weird week for this company at a time when it doesn't need it. A very strong struggling company fundamentally. And now, you would think, a cash raise is off the table at least from a perspective of Bed Bath coming out here and selling more stock.

JULIE HYMAN: Yeah, and he has made by the way $68 million on this trade. We should point that out as well. If you take a look at the Yahoo Finance Interactive, I pulled up our heat map of meme stocks overall, over the past three months. Because this is when we have seen-- as we've seen a bounce in the broader market, we have seen a bounce in these meme stocks and a return of interest, as well as some new ones added to the list. Some of these Hong Kong IPOs that we've been talking about. So here is an equal weight heat map of how they have done over the past three months time.

BRIAN SOZZI: Nice study, Julie.

JULIE HYMAN: So we have seen a lot of increases and many of these stocks. Bed Bath & Beyond is on your upper left here. Let's just call it up for a moment.

So here is the intraday chart, the 20% drop that we had yesterday. And then the stock is dropping again this morning. If you take this to a three month chart, you can see the big surge that the shares have seen. Or if you look at a year-to-date, that surge, by the way, from the lows is about a 300% gain.

But for the year-to-date, it's up about 27%. And if you look at the one year chart, it looks pretty bad. It's down 29%. So we have seen since the lows, right, that people have come in here and they've been buying. But--

BRIAN SOZZI: What's the trigger point? I've been trying to think a lot about this. Back when all these stocks were essentially created or coined as memes, there was a reason. People were home trading. That reason hasn't necessarily existed here in August. So it's been fascinating to watch this.

JULIE HYMAN: It has been fascinating to watch. And by the way, you have like the granddaddy of them all, GameStop, which is now down about 3% on the year. Ryan Cohen--

BRIAN SOZZI: Ryan Cohen.

JULIE HYMAN: --the chairman of that company. And you can see that stock and what it has done. If you go back-- let's take a look at the three year chart to show the spike in those. So over the past three years, it's still up a lot. But down considerably from those highs.

BRIAN SOZZI: You know it's so funny, you talk to-- as we have-- the Chewy folks, they don't want anything to do with Ryan Cohen. They won't even mention that he even founded the company. They have really distanced themselves from him really ever since they went public a couple of years ago. Maybe with good reason. Why do they want to be looped into this?

JULIE HYMAN: Yeah, and I should mention, we have seen a big, big surge in interest in Bed Bath & Beyond and some of these other memes on the Yahoo Finance platform. So reflecting all of this interest.