(Bloomberg) — The individual investors who flocked to Bed Bath & Beyond Inc. over the past week, trying to squeeze short sellers and make a killing, fueled in part by the belief that a Ryan Cohen-led shakeup is underway, are now sitting on $205 million in losses — at least.
An explosion of activity saw more than a billion shares of the struggling home goods retailer sell this week, bringing back the kind of cheers and excitement on popular forums like Reddit’s WallStreetBets last seen at the height of the meme craze last year. At one point on Wednesday, the stock was up more than 130% for the week.
It all came crashing down on Thursday after news that Cohen himself had effectively divested himself of the stock and cashed in a $68.1 million profit.
“Sometimes when things look too easy and you see a 100% rally for no apparent reason, that’s not a sign to enter.” It’s an exit sign,” said Greg Taylor, chief investment officer at Purpose Investments. “That should be the lesson for everybody to get out of this.”
The same crowd that made Cohen its champion as he helped fuel GameStop Corp.’s boom. in 2021, bought a record $131 million in Bed Bath & Beyond shares on Tuesday and Wednesday, according to data from Vanda Research that Bloomberg analyzed to estimate the paper’s losses. In those same two days, Cohen reduced his 11.8% stake in the company to zero.
A representative for RC Ventures on Thursday declined to comment on the sale.
“Investing is an every-man-for-himself business, and public figures are not on your side,” said Michael O’Rourke, chief market strategist at JonesTrading. “No matter what type of trader you are, lessons are usually taught by your own gains and losses.”
Losses were piling up on Friday as retail traders on Fidelity’s platform rushed to exit. Sells of Bed Bath & Beyond outpaced buys by a nearly 2-to-1 ratio as shares fell a record 41% to $11.03.
“The average retail investor’s portfolio has shrunk significantly year-to-date, meaning the capacity to absorb further losses is limited compared to last year,” said Giacomo Pierantoni, head of data at Vanda Research.
Overall, the retailers have put about $270 million into AMC Entertainment Holdings Inc. and Bed Bath & Beyond over the past week, though the stock has lagged the S&P 500’s 2.4% advance this month. For the year, both are down more than 20%.
Despite all of the week’s struggles, meme traders were at it again on Friday: GameStop and AMC Entertainment were among Fidelity’s most-bought stocks.
(Updates market close data.)
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