Bed Bath & Beyond Inc (NASDAQ:BBBY)
Bed Bath & Beyond (NASDAQ:BBBY) –As the company works through the bankruptcy filing process, it has announced that 36.83% of its stock will soon be delisted from the Nasdaq stock market.
In a filing that Bed Bath & Beyond made with the Securities and Exchange Commission on Tuesday afternoon, the company announced that trading in the company’s common stock would be halted when the company reopened for business on May 3rd.
Bed Bath & Beyond stated in its announcement that it was filing for bankruptcy and that the company’s shares would most likely be delisted. In addition, markets such as Nasdaq and the New York Stock Exchange have requirements that companies must satisfy before their stocks can be listed on those markets. These requirements can include minimum levels of liquidity, market value, or stock price.
In early trading on Wednesday, Bed Bath stock was trading 20% lower at 16 cents per share.
The Delisting of Bed Bath & Beyond
On April 26th, 2023, Bed Bath & Beyond was removed from the New York Stock Exchange’s listing of publicly traded companies. This decision was made after the company’s stock had been trading at a price that was significantly lower than the minimum requirement set by the exchange for a considerable amount of time. Despite the fact that the stock of the company will still be traded on other exchanges, the delisting of the company has caused investors and analysts to express concern.
What Does This Mean for Bed Bath & Beyond?
Although the delisting of Bed Bath & Beyond’s stock is an unfortunate turn of events for the company, it does not necessarily signal the company’s imminent demise. It is essential to keep in mind that the delisting is primarily a matter of formality, despite the fact that the action might have a momentary effect on the price of the company’s stock. The fundamentals of Bed Bath & Beyond’s business have not changed, and the retailer is carrying on with business as usual.
Having said that, the delisting does draw attention to some of the difficulties that Bed Bath & Beyond is currently dealing with. In recent years, the number of customers who shop at the company’s physical locations has decreased, and the company has had difficulty adapting to the rise of online shopping. In addition, the business has not seen a significant return on investment from its recent initiatives to broaden the scope of the products and services it provides, which have included the purchase of a number of lesser-known brands.
Bed Bath & Beyond, Inc. has been served with a notice to delist from the stock exchange not once, but twice already in 2018. After the company was late in reporting its quarterly results in January, Nasdaq issued a warning to the company that its shares would be delisted from the exchange. The report was eventually submitted by the company, and they got back into compliance.
The decision, on the other hand, will be final this time. In its filing, Bed Bath stated that it does not intend to appeal the decision.
After the company is delisted from the market, the shareholders will continue to own the stock. However, it will be more difficult to trade those shares. In spite of their insolvency, the stocks of some companies continue to be traded in over-the-counter markets. According to Finra, in order to indicate that the company has filed for bankruptcy, the letter “Q” is typically added to the end of the stock symbol.
When Barron asked Bed Bath & Beyond whether the company intends for its shares to trade over the counter, Bed Bath & Beyond did not immediately respond.
Finra warns investors not to make the assumption that previously held stock will increase in value if the company emerges from bankruptcy and advises against the practice of owning shares of a company that is currently in the process of filing for bankruptcy protection. According to the agency, the opposite is more frequently the case, with the majority of reorganization plans ultimately leading to the cancellation of existing shares at the conclusion of the process.
Immediately following the filing of a Chapter 11 petition by a business, unsecured creditors, who may include leaseholders and suppliers, begin to line up in an effort to be repaid. How much money Bed Bath is able to raise from the sale of either part of its business (such as inventory) or the chain itself as a “going concern” will determine how much will be paid back to the company’s creditors.
According to Daniel Gielchinsky, partner and commercial litigation lawyer at DGIM Law, “the majority of the money here is going to end up with the landlords and senior secured lenders.” He said, “I don’t think there is enough money to trickle down to anyone else,” especially not shareholders, who are typically at the bottom of the food chain. “I don’t think there is enough money to trickle down to anyone else.”
He continued, “It’s pretty unlikely that any equity will be repaid,”
The Prospects for Bed Bath & Beyond in the Future
What does the future hold for Bed Bath & Beyond? There is no doubt that the company will have to contend with difficulties, but there are also grounds for optimism. Despite recent challenges, Bed Bath & Beyond continues to maintain a solid customer base, and the brand continues to do well. In addition, the company has taken measures to address some of the challenges it faces, such as updating its online presence and making the shopping experience better in its physical locations.
It is likely that Bed Bath & Beyond will continue to face headwinds in the years to come as the company works to adapt to shifting consumer preferences and a rapidly transforming retail landscape. Nevertheless, the company has the potential to weather these challenges and emerge even stronger in the years to come if it has a strong brand and a customer base that is dedicated to the brand.
To summarize, the delisting of Bed Bath & Beyond’s stock is unquestionably a setback for the company, but it does not necessarily indicate that the company will go out of business. Even though the business is facing difficulties in the form of intensifying competition and shifting preferences on the part of customers, it still maintains a solid customer base and a powerful brand. Bed Bath & Beyond can position itself to be successful in the years to come by maintaining its ability to adapt and evolve in response to the challenges that it is currently facing.
Featured Image: Megapixl
