GameStop Chairman Reveals 10% Stake in Retail Powerhouse

Cohen was not without his criticisms of the company

Digital Content Manager
Mar 7, 2022 at 10:36 AM
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The shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) have exploded higher this morning, after Ryan Cohen -- the co-founder of online pet retailer Chewy (CHWY) and Chairman of GameStop (GME) -- shared that he had a near 10% stake in the retailer through his company RC Ventures. Cohen, in a letter to BBBY's board, said BBBY is struggling with how to navigate supply chain issues bogging down most retailers and reverse its market share losses. He added that several top executives have taken excessive compensation, despite Bed Bath & Beyond's clear struggles, and called for the company to "narrow its focus to fortify operations and maintain the right inventory mix to meet demand" while also exploring strategic alternatives. 

Cohen isn't wrong about BBBY's struggles, at least from a technical standpoint. Heading into today, the security was down 43.5%, and struggling to reclaim the $18 level. This is a far cry from its January 2021 peak of $53.90, when the home goods concern reached the height of its "meme stock" status. The equity is still a ways away from this peak, up 56% at $25.27 at last check, though the surge has BBBY toppling several long-term trendlines, including its 120-day moving average, which has kept a lid on shares since late August. 

Sentiment surrounding BBBY has been bullish, despite the negative price action. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day call/put volume ratio of 5.90, which stands higher than 91% of readings from the past year. This implies a healthier-than-usual appetite for long puts of late. 

What's more, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.73 stands higher than 21% of readings from the past year. This implies calls have rarely been more popular among short-term options traders. 

Today, however, puts rule the roost. So far, 108,000 puts and 46,000 calls have exchanged hands, which is 27 times the intraday average, with volume sitting in the top percentile of its 12-month range. The most popular position is the March 15 put, followed closely by the weekly 3/11 28-strike put, with positions being opened at the latter. 

Analyst sentiment has also been quite pessimistic. Of the 12 in coverage, all but one call it a "hold" or worse. Plus, the 12-month consensus price target of $14.88 is now a 45.5% discount to current levels. 

 

 

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