Can Bed, Bath Get Beyond Its Struggles in Recent Years?
A large U.S. retailer is making a push to return to its former glory.
Over the last year and a half, retail investors have mounted an invasion of Wall Street on a scale never seen before.
A record number of retail investors flooded the market in 2020, and that trend has picked up the pace in the new year. According to JMP Securities, more than 10 million new brokerage accounts have been opened already in 2021 – which is roughly the total number of new accounts for all of 2020.
Not only has the influx of “mom and pop” investors driven up the share price of crowd favorite stocks like GameStop Corp. (GME), AMC Entertainment Holdings, Inc. (AMC), and others to dizzying heights, they’re also influencing how company executives at the highest level operate.
We’ve already seen AMC make a huge concession to its own army of retail traders earlier this month – scrapping a proposal to sell an additional 25 million shares that would have helped the theater chain firm up its bottom line and further renovate its locations.
The decision came after AMC felt significant pushback from its retail shareholders that worried about dilution as they attempt to squeeze the massive short positions on the stock.
But AMC isn’t alone.
Recently, Bed Bath & Beyond Inc. (BBBY) announced its intention to make some drastic moves to keep their retail investors happy.
And many are seeing it as the first step toward recovery for the beleaguered retailer’s stock.
Where’s the money?
After becoming one of the original “meme stocks” that retail investors hunting short positions drove up to incredible heights in January, Bed Bath & Beyond is looking to reward the investors that have supported the company.
CEO Mark Tritton said this week that “our goal is to make you a happy investor now and over time.”
That feel-good sound bite comes as Bed Bath & Beyond commits to spending more than $1 billion on revamping its flagship New York City location, as well as stores across the country, over the next three years.
The company is also investing in improving its online shopping platform and presence in an effort to compete with some of the biggest e-commerce retailers that it has fallen behind in recent years.
Armed with the support of a slew of new retail investors, BBBY is clearly looking beyond their meme stock status toward regaining a portion of the 63% its stock has lost since its high in December 2013.
Here’s what I think about BBBY’s recovery chances.
How do I get some?
Look, there’s a good reason why BBBY stock has fallen precipitously for the last seven years – and it’s something not even a horde of retail investors can change.
I do not like BBBY – or any other retailer that is heavily reliant on brick and mortar locations – as a comeback stock. In fact, I think all such retail names will head lower going forward.
The market has spoken, and e-commerce is the future. And while BBBY is making an effort to shore up its online presence, I think it’s too little, too late.
Amazon.com, Inc. (AMZN) has established itself as the dominant force in retail for years now, and I believe it will continue to take market share away from other retailers – which makes it my favorite way to trade the retail space.
With much of the world still under lockdown, and the Delta variant threatening new restrictions here in the U.S. we could see a resurgence in buyers of the world’s largest online shopping platform.
Right now, shares of Amazon can be had at a solid discount from its recent highs as the broader market has pulled back since Monday afternoon.
I know the list price of Amazon is very high, but if you’re looking to put some money into the retail space, I believe you can’t go wrong with Amazon.
How You Can Profit from All of the New Money in the Market
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In the Spotlight: Tesla smashes earnings
Amid an up and down year for Tesla, Inc. (TSLA) stock, shareholders got some fantastic news this week.
And it could just be a taste of things to come.
During Tesla’s latest earnings call on Monday afternoon, the electric automaker revealed that it had more than tripled it EPS in Q2 2021 compared to the same quarter a year ago – crushing analysts’ expectations of $0.97 per share with a surprise $1.45 per share.
Even during a semiconductor shortage and difficulties with battery production, Tesla continues to improve its performance.
As you likely know if you’ve been following Profit Pregame, I’m incredibly bullish on the EV industry, and I believe we’re on the cusp of a major shift in which electric vehicle sales will overtake gas-powered vehicles in the coming years.
And I have no doubt that Tesla will continue to be a major player in the space.
With Tesla’s shares falling nearly 2% yesterday, the market’s overall weakness is giving us a great entry point. But as always, I’ll be keeping a lookout for any pullback on this and other EV names to generate huge profits in the coming months and years. Stay tuned.