Bed Bath & Beyond shares plummet 48% on plans to raise $1 billion

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Shares of Bed Bath & Beyond ( BBBY ) fell 48% on Tuesday, a day after the struggling retailer announced a stock offering to raise up to $1.025 billion.

One analyst described the company’s move as “a last-ditch effort to secure its future.”

“While the timing of the offer appears relatively opportunistic given the stock’s gain of more than 90% on February 6, we think capital allocation decisions under pressure remain poor,” he wrote Morningstar’s Jaime Katz in a note to investors. The analyst has a sell rating on the stock.

BBBY surged 92% on Monday before announcing an offering of preferred stock and warrants as a recent rally in the near-bankrupt company gained momentum.

The retailer’s shares are very short, with short interest of about 53% of the free float, according to data compiled by S3 Partners.

Bed Bath & Beyond has been trying to save cash as it teeters on the brink of bankruptcy after racking up more than $1 billion in debt and losses through the end of 2022.

The company warned in a recent regulatory filing that it was hit by a reminder from JPMorgan and does not have enough funds to pay off its loans.

Meme stocks have risen broadly over the past month as some of the trades reminiscent of the 2021 “meme craze” have regained popularity so far this year.

GameStop ( GME ) and AMC ( AMC ) have both been around since early 2023. On Tuesday, AMC shares fell 9% after gaining 11% in the previous session.

Shares of Bed Bath & Beyond were mostly in an upward trend after hitting a 52-week low of $1.27 on January 6. Shares closed at $3.01 a share Tuesday.

Investors have taken a risk-on approach over the past month, with AI-related stocks appearing alongside struggling tech names as the biggest winners alongside yesterday’s meme names.

Artificial intelligence maker ( AI ) rose 6% on Monday, while smaller, lesser-known names like ( BBAI ) rose 18% and AI company speech SoundHound (SOUN) increased by 42%. All three stocks returned gains on Tuesday.

Ines is a Senior Business Reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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