Bed Bath and Beyond Stock Disintegrates, Stock Market Tumbles on Fed Remarks

Bed Bath & Beyond stock is plummeting, the stock market is tumbling, and it's a bad time to be a crypto investor. Here's what you need to know.

Ryan Cohen and his venture capital firm, RC Ventures, have been major players in numerous meme stock rallies. In the early months of 2021, Cohen and his company spearheaded a massive short squeeze on shares of GameStop, a company where Cohen would eventually become CEO. Most recently, RC Ventures disclosed its large amount of shares in Bed Bath & Beyond, a retailer that specializes in selling home goods. 

Bed Bath Beyond
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Cohen’s aggressive position on BBBY encouraged many retail investors on sites like Reddit to follow suit and pour money into the company’s shares. However, Cohen quickly cashed out of the retailer this week, making a tidy profit and leaving the meme stock enthusiasts holding the bag. Late Thursday, Cohen’s company sold its over 11% stake in BBBY, and the retailer’s stock price dropped 35% this morning on the news.

Meanwhile, the stock market is tumbling on remarks investors read from the Federal Reserve’s July meeting minutes. It sounds like the central bank is still open to increasing interest rates to help curtail inflation. While many investors hoped the Fed would slow its interest rate hiking spree in light of falling inflation, the central bank doesn’t want to take any chances with the US dollar.

Bed Bath & Beyond Disintegrates

As soon as the average retail investor heard about the meme stock weirdness happening in Bed Bath & Beyond stocks, Cohen and his venture capital firm jumped ship. It’s helpful to remember the old adage: by the time you’ve heard about a way to get rich in the stock market, it’s too late to invest. A massive short squeeze in BBBY stocks on Tuesday showed Cohen repeating some of the same tactics that helped him make a fortune on GameStop last year. 

Bed Bath & Beyond is circling the drain, according to analysts. The company seems to be on the verge of slipping into the same quiet bankruptcy that ended Kmart, Circuit City, Borders, and Sears. Cohen, a master at squeezing short positions and breathing excitement into obsolete retailers, saw this as a perfect opportunity to make a tidy sum before BBBY stock bottomed out. 

“We think the fact that RC Ventures plans to liquidate its entire stake in the stock is a telling sign that there is less and less support of key fundamentally driven names in this game,” says Wedbush analyst Seth Basham. “With that catalyst, we think the stock can reverse its course and start trading down.”

Stocks Stumble After Fed Minutes Published

Federal Reserve Building (1)
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The Fed recently published its minutes from its recent July policy meeting. That meeting saw the central bank unsurprisingly hike interest rates again, a painful but necessary step to bring the economy back from the brink. While lowering demand for money might seem counterintuitive, it’s the best way to get inflation to cool off. The news that the Fed might continue to hike rates was enough to convince investors to back off on their recent bullish sentiment.

The S&P 500 dropped 1.15% this morning, putting it on track to end a four-week winning streak. Meanwhile, the Dow Jones Industrial Average sank 0.8%. The tech-heavy Nasdaq Composite was hammered the hardest, owing to the speculative nature of the tech sector. It dropped a full 1.75% Friday morning as the markets opened. 

Credit Suisse notes that if Fed Chairman Jerome Powell tries “to re-tighten financial conditions…or acknowledges the resilience of large chunks of the U.S. economy, the one driver of the rally we are witnessing – multiple expansion driven by lower yields – could prove precarious, as we move into a phase in which better news for the economy could be bad news for the market.”

Crypto Winter Impacts Entire Industry

Bitcoins 3D Render Isolated Cryptocurrency Dark Background Studio Photo Realistic Golden Coins Bouncing
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The crypto downturn continues to cause mayhem in the wider tech industry. Many firms doubled down on crypto at the height of its popularity in 2021, but the sudden downturn in the performance of digital tokens has gutted companies like Binance, Coinbase, and Crypto.com. It’s also caused issues for game companies that planned to create video games with “play to earn” elements heavily involved in the crypto industry.

One example of this is Untamed Isles, a game that used the crowdfunding site Kickstarter. After failing to create a functional build of the proposed game, the developers announced on the game’s Kickstarter page that they would have to scuttle the project. According to the developers, the shifting finances in the crypto industry made the game impossible to complete.

“The truth is that the cost of development is high and there were lots of bumps on our way to this moment,” they confessed. “Since we started the journey in 2020, the economic landscape has changed dramatically both generally and specifically for cryptocurrency, and we are not confident in the current market. We ran out of financial resources and we can’t carry on [with] the development at this moment.”

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