The true facts about Bed Bath & Beyond, the failed houseware chain, include: It has filed for bankruptcy. It has no current way of avoiding turning into dust, and its bankruptcy filing in April came after what it said were serious efforts to find a buyer who would keep it alive. Bed Bath & Beyond has already purchased a one-way ticket to hell. It has more debt than assets and no apparent means of flipping that equation. Hundreds of its stores have closed or will do so once their everything-must-go sales end. Its stock, if things stay on their extremely obvious present course, will eventually be worth zero. Whatever money is left when the deed is done will not go to regular Bed Bath shareholders. Creditors, not equity owners with regular stock, go to the front of the line when a bankrupt company divides up what remains.
Another true fact about Bed Bath & Beyond is that 15 million shares of its stock changed hands on Wednesday, and 7 million the day before that, and 13 million before that, and 36 million the day before that. The stock has been on a steady downhill descent since last summer as it’s become clear, and as the company has warned in writing, that Bed Bath is in dire straits. But it raised a few hundred million bucks from retail investors anyway, via a weird deal with a hedge fund that bought the stock and then flipped it immediately to (one would presume) the kinds of people who think it’s fine to own nostalgic stocks that are verging on worthlessness. It was all a very modern financial story: Bed Bath following market regulations by being quite explicit that its stock could soon go to zero, and memestock investors buying it anyway in what amounted to a tithe to creditors that have loaned Bed Bath money over the years.
At least in the months preceding the bankruptcy filing, Bed Bath was nominally holding out hope that it could turn things around. That’s not really happening now. Bed Bath filed for Chapter 11 bankruptcy, which is the “we’re still hoping to maybe find a solution” kind of bankruptcy. But it’s acting more like a company in Chapter 7 bankruptcy, which is the “we’re done, kaput, over” variety. Bankruptcy experts say Bed Bath looks as if it’s really just closing up shop, because, well, it is closing up shops. A company that thinks it might find a way to keep the doors open does not announce that it’s closing all of its stores by summer, as Bed Bath has said. So, again: This stock is marching to zero dollars and zero cents. Yet the stock has gone up this month, from about 7 cents at one point to about 20 at others. For some reason, Reddit-adjacent investors continue to buy it as if it’s a trading card that will have value after Bed Bath is gone.
Well, I like trading cards. In an effort to understand this bizarro corner of the stock-trading world, this morning I spent $71.04 (plus a commission) on E-Trade to buy 400 shares of Bed Bath stock at the exact price per share of $0.1776. I like to think that those decimals signal my independence from old-school market rules. Slate has agreed to reimburse me the full cost of the trade so that we may learn together what it is like to be on the deck of the Titanic as the bow plunges into the Atlantic. We seek to understand what literally happens to a stock that goes to nothing while it sits in one’s brokerage account and what thrills might be gained from being part of that party. Apparently a significant number of people want to be at this party too. If the unthinkable happens and the stock goes up in the next few months, I plan to sell it and donate the proceeds to a worthy charity.
To be clear: That is just about unthinkable, seeing as Bed Bath has looked into finding a buyer and has not gotten a bite. If many months of seeking a white knight while being a famous publicly traded company has not yet worked, it seems as if continuing the search in bankruptcy will also not yield one.
Or, let’s think about it a different way. Companies do get bought out of bankruptcy, and some of them do become success stories after that. And who knows—maybe Bed Bath can be one of those. But as a retail shareholder in Bed Bath, I am almost certainly losing, whether that happens or not. If Bed Bath simply gets buried, as it’s on track to do, then the stock goes to zero and that’s the end of the story. I will own 400 shares of nothing, and those shares will have a total value of nothing, which is 0 percent of nothing.
But even if Bed Bath lives, I am screwed. As the Securities and Exchange Commission explains it in a note intended for retail investors who might do exactly what I have just done: “Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company’s plan of reorganization will cancel the existing equity shares.” At best, the regulator warns, I’ll likely be substantially diluted from my already almost-zero stock. I am not so much hoping for a miracle as for two: that the company gets bought (sure, maybe, I don’t know) and that the new owners decide to look out for my best interests (uh-huh).
The knowledge I crave is more literal, though. What happens to my zeroed-out Bed Bath share when it goes to zero? Does it disintegrate, Thanos-style? Does it go on my brokerage’s “Realized Gain and Loss” page as a sale for $0.00? Is there a big red line running across it? Does it just stay on my account forever, a permanent grouping of zeros? Does a siren blare out when I click on that BBBYQ stock ticker? If the stock remains sitting there for an extended period before being cleaned up, is there an easy option for me to hide it? It’s obvious and easy to look up what happens to stock of a company that gets bought out. When Elon Musk bought Twitter, people’s shares disappeared one day and their accounts got $54.20 in cash per share. But I want to be around to witness the on-screen manifestation of holding a Bed Bath & Beyond bag at the end.
This trade will be the rare market move with no loser. I will receive my usual freelance rate for this article, plus reimbursement for my impending loss. Slate, the publisher of the article, will get a mildly different take on Bed Bath’s bankruptcy from the other stories likely to be written about it this week. And someone on the other side of this trade will get to convert what should soon be worth zero dollars into 71 of them. My brokerage does not show me who’s ultimately on the other side of my trade, so I don’t know if it’s some big financial institution that still has stock to unload, a dealer who’s still trying to sell shares on behalf of the company itself to raise money, an automated market maker that’s been sitting on these shares for who knows how long, or a nice woman at her kitchen table in Rochester who is pleased to cut her losses. I expect to lose my $0.1776 per share, but getting to be around when the lights go out will be priceless (plus my $71.04 reimbursement). If you buy Bed Bath stock now, you too should consider doing it with other people’s money. Alternatively, you could just not do it. That would also be an option.
