Why are Bed Bath & Beyond (BBBY) Shares Crashing Today

Shares of Bed Bath & Beyond (NASDAQ: BBBY) are down about 20% in premarket Wednesday after the company filed a form S-3 shelf filing.

This form is filed when the company aims to raise new capital. In this case, Bed Bath & Beyond didn’t specify the number of shares it is looking to offload.

“We may offer, issue and sell shares of our common stock from time to time,” it is said in the filing.

“We intend to use the net proceeds from any sale of the securities described in this prospectus for our general corporate purposes, which may include repayment of our indebtedness, future repurchases of our common stock and financing possible acquisitions,” BBBY added.

Shares of a popular meme stock were previously trading about 6% higher in premarket trading as investors are preparing for a strategic update from the company that is scheduled for later today.

Earlier this week, Morgan Stanley analyst Simeon Gutman said BBBY is facing “critical months ahead” with the holiday season “never been more important.”

He added that BBBY reportedly finalizing terms to secure financing in the range of $375 million to $400 million should dominate today’s strategic update call.

"By our math, BBBY will burn about ~$1b of cash in '22, and may require ~$800m of liquidity ahead of the holidays for inventory, payables and for operations. If confirmed, there will likely be a steep cost to secure such financing, potentially a high interest rate, or some kind of PIK (payment-in-kind)," Gutman said in a client note.

The analyst also added that securing such financing would be “a crucial first step” for BBBY.

By Senad Karaahmetovic

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