That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day.
But I’m still staying far away from shares. That doesn’t mean another rally won’t materialize - anything is possible. Despite previous retail investor interest, this stock doesn’t have the fundamentals to support another rally. Thus, the selloff in BBBY stock will likely continue in the absence of any good news. In the retail world, that generally doesn’t bode well. Bed Bath & Beyond is cutting costs everywhere and trying to keep its head above water. The company is in trouble and all indications are that this holiday season may be the worst in some time. However, that could also be too rosy of an outlook. If the company can turn around this downward spiral by convincing suppliers the company is good for it, it may be able to survive. Currently, it’s running into trouble, with sales hurting due to out-of-stock items that are tied to suppliers holding back shipments.
#Bed bath beyond stock long term outlook 2018 free#
If Bed Bath & Beyond can free up room on its balance sheet, it may be able to make it through this holiday season in decent shape. That said, there are notable benefits to this conversion for the company.
Thus, existing bondholders have less incentive to convert their debt to equity that’s eroding in value. In anticipation of this, shareholders are selling while the price remains (relatively) high, creating a self-fulfilling prophecy. However, the signal the offering sends to shareholders is one that most don’t seem to like right now.įor one, debt holders who agree to convert their debt to equity stand to dilute existing shareholders. Plenty of companies with overburdened balance sheets attempt such moves in difficult times. This convertible debt offering isn’t some sort of sneaky maneuver. Let’s dive more into what this offering means and why shares of BBBY stock continue to slip on the news.
Thus, as bankruptcy risk increases with Bed Bath & Beyond, debt holders appear to be stuck in a no-win position. Existing shareholders will experience dilution from such a deal - leading to a lower price per share - and existing bondholders will forego their more senior rights in the event of a bankruptcy. Essentially, what the company is trying to do is restructure its balance sheet, issuing equity (shares) to offload some of its debt.Īs it turns out, investor appetite for this offering is limited. This underperformance follows some disappointing news around the company’s latest restructuring efforts.Īs InvestorPlace reported yesterday, the company recently extended its deadline for its convertible debt exchange from Dec. Despite trading as high as $4 per share on Monday, BBBY stock has since sunk to the $3.20 level. This week has been another dismal one for shareholders in embattled retailer Bed Bath & Beyond (NASDAQ: BBBY).
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