The Conversation (0)
Ariana Baio
Aug 18, 2022
Why Jim Cramer Is Watching Ford and Bed Bath & Beyond Tuesday
Video
Its the return of the meme stock, this time relating to Bed, Bath & Beyond.
A 20-year-old US student has made a $110 million (£91m) profit after betting on the Bed, Bath & Beyond stock for one month.
The student, Jake Freeman, and his family bought 5 million shares of the Bed, Bath & Beyond stock for approximately $5.50 (£4.58) in July for a total of about $25 million (£20.8m).
The low-earning stock is considered a meme stock, or one that struggles on it's own but is manipulated by investors through social media talk.
Reddit forums like r/wallstreetbets track meme stocks like Bed, Bath & Beyond, GameStop, and AMC and an increase in talk about one can cause the price of the stock to rise beyond its actual value.
Sign up for our free Indy100 weekly newsletter
On Tuesday, Freeman sold shares for more than $130 million (£108m) after the price rose to $28 (£23).
By Thursday the price of Bed, Bath & Beyond (BBBY) dropped down to $17.43 (£14.53).
\u201cBed Bath & Beyond shares have plunged more than 25% \ud83d\udcc9 https://t.co/URW78bwzbt\u201d— Bloomberg (@Bloomberg) 1660832188
\u201c"We're in the Wild West," says @jimcramer on meme-stock trading $BBBY. "The SEC absolutely should worry about it. The meme-sters are front and center. They should not do reports, they should make inquiries. I don't have subpoena power, if I did I would use it right now."\u201d— Squawk Box (@Squawk Box) 1660827940
“I certainly did not expect such a vicious rally upwards,” Freeman told the Financial Times. “I thought this was going to be a six-months-plus play … I was really shocked that it went up so fast.”
Freeman, a student at University of Southern California, was able to afford the initial $25 million thanks to friends and family. His uncle is Scott Freeman, a former pharmaceuticals executive.
\u201cIf you\u2019re wondering how a 20-year-old college kid turned $25 million into $110 million betting on Bed Bath & Beyond, it\u2019s that he came from a wealthy family.\u201d— Douglas A. Boneparth (@Douglas A. Boneparth) 1660827625
When Freeman acquired BBBY in July, he wrote a letter to the board of directors saying Bed, Bath & Beyond was “facing an existential crisis for its survival" and suggested they “cut its cash-burn rate, drastically improve its capital structure, and raise cash" according to an SEC filing.
He also posted the Bed, Bath & Beyond Reddit forum asked people to 'give Bed, Bath & Beyond' a chance and noted he had has "worked in the financial industry since 14 years old".
Have your say in our news democracy. Click the upvote icon at the top of the page to help raise this article through the indy100 rankings.