An explosion of activity saw more than one billion shares of the struggling home-goods retailer trade this week, bringing back the type of cheering 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 actually dumped the stock and cashed in on $68.1 million in profits.
“Sometimes when things seem too easy, and you see a 100% rally for no apparent reason, that’s not a sign to get in. That’s a sign to get out,” said Greg Taylor, chief investment officer at Purpose Investments. “That’s what the lesson should be to anyone to get out of this.”
The very same crowd that has made Cohen their champion as he helped trigger 2021’s GameStop Corp (NYSE:GME). boom, bought a record $131 million in shares of Bed Bath & Beyond on Tuesday and Wednesday, according to data from Vanda (NASDAQ:VNDA) Research that Bloomberg analyzed to estimate the paper losses. In those same two days Cohen brought 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-person-for-themself 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 generally taught by ones own profit and losses.”
Losses were piling on Friday morning, with retail traders on Fidelity’s platform rushing for the exits. Sell orders on Bed Bath & Beyond outpaced buys at a nearly 2:1 ratio as the stock fell an additional 40% to $11.09 at 11 a.m. in New York.
“The average retail investor’s portfolio is down considerably year-to-date, which means that the capacity to cope with additional losses is limited compared to last year,” said Giacomo Pierantoni, Vanda Research’s Head of Data.
All told, retail traders have pushed about $270 million into AMC Entertainment (NYSE:AMC) Holdings Inc. and Bed Bath & Beyond over the past week even as the stocks trail the S&P 500 Index’s 2.6% advance this month. For the year, the two are down more than 20% each.
Despite all the week’s struggles, meme traders were at it again on Friday: GameStop and AMC Entertainment were among some of the most bought shares on Fidelity.
©2022 Bloomberg L.P.