On Friday, investors flooded social media platforms such as Reddit with criticism of Ryan Cohen’s sale of his stake in Bed Bath & Beyond Inc, accusing him of fueling a meme stock rally only to profit $60 million.
On Thursday, the billionaire investor revealed that he had sold his 9.8% stake in the struggling home goods retailer, nearly five months after amassing it and lobbying for changes. In response, the company fired its CEO, replaced some board members, and agreed to look into selling its baby products division.
According to a Reuters review of regulatory filings and a person familiar with the matter, Cohen stands to profit before taxes on the stock sale of between $55 million and $60 million.
Cohen did not explain his decision and did not respond to requests for comment. Last year, he built a loyal following of individual investors who bet on his turnaround of video game retailer GameStop Corp (GME.N), some of whom expressed outrage and disbelief after following his lead on Bed Bath and Beyond only to see him abruptly cash out.
Cohen sold his Bed Bath & Beyond stock on Tuesday and Wednesday after it gained 300% in August during a speculative rally in meme stocks, a popular term for shares traded by investors primarily based on social media hype rather than economic fundamentals.
Bed Bath & Beyond shares, which briefly reached $30 earlier this month, closed Thursday at $18.55, down 20% after filings revealed Cohen planned to sell his shares. It fell 44% more in after-hours trading after filings revealed that he had sold all of his shares.
The stock was set to open 43% lower on Friday, wiping out the entire week’s gains.
“The writing is on the wall that Bed Bath & Beyond shares have decoupled from economic reality once again,” said Wells Fargo analyst Zachary Fadem.
Ryan Bennett, a 43-year-old agriculture worker from Beloit, Wisconsin, told Reuters that he lost more than $40,000 because he followed Cohen’s lead and purchased Bed Bath & Beyond stock.
“I feel like I took my hard-earned money and put it right into Cohen’s pocket,” Bennett said.
In a regulatory filing on Thursday, Bed Bath & Beyond said it was working with external financial advisors and lenders to strengthen its balance sheet, an admission that it needs to raise capital to stay afloat. According to its most recent financial disclosure, the company had a mountain of long-term debt totaling $1.38 billion and only $107.5 million in cash as of the end of May.
The investor reaction raises the question of whether Cohen will continue to wield significant power over meme stock devotees. Some investors lamented their losses and Cohen’s role on Wallstreetbets, a Reddit forum frequented by such investors.
“After reading what Ryan Cohen just did, I hope you all understand that he is not one of us,” Ronpm111, one of the posters, wrote.
Ryan’s shares of GameStop, in which he owns 12% and serves as chairman, have dropped 20% since he disclosed his Bed Bath & Beyond stock sale. Many investors, including Bennett, are wondering whether Cohen’s stock sale at Bed Bath & Beyond will have an impact on GameStop’s status as a meme stock.
“I’m not sure I trust him with a stake in GameStop. I’ll probably try to get out of that “Bennett explained.
