Is BBBY Stock Headed for Bankruptcy? One Analyst Thinks So. – InvestorPlace

Amid a rather impressive speculative surge today in a number of meme socks,Bed Bath & Beyond (NASDAQ:BBBY) has also seen some impressive price action. At its highs earlier today, BBBY stock surged more than 14% higher, despite a lower overall market. Right now, most of those gains have been pared, with Bed Bath & Beyond now trading up only 1% as of 2:00 p.m. Eastern.

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That said, BBBY stock is in the green. On a day like this, thats rather impressive. And perhaps its something to celebrate, with the retail crowd not giving up on their favorites like Bed Bath & Beyond.

As a favorite of retail investors (both investors who arent in the institutional bucket and those who favor retailers), Bed Bath & Beyond has been a fun stock to watch. This stock has surged from pandemic lows below $4 per share to nearly $54 per share at the peak of the previous meme-stock bubble. Since then, shares have trended in the opposite direction, now back to single-digit territory.

The pandemic reopening thesis with Bed Bath & Beyond didnt really play out as many expected. In some respects, increased confidence in retail stocks in general has helped BBBY stock and its competitors. However, with the economic outlook increasingly uncertain given the rising rate environment were now in, investors arent so certain. Accordingly, volatility has manifested mostly to the downside of late.

With that said, lets dive into one more potential headwind investors should be watching right now.

In addition to the aforementioned headwinds, Bed Bath & Beyond is a stock thats been in financial trouble for some time. The companys balance sheet isnt what many would call pristine. And given what one analyst is calling deteriorating financial performance, its possible investors may need to seriously consider endgame scenarios with BBBY stock.

Thats according to Anthony Chukumba of Loop Capital, who chimed in on Bed Bath & Beyond with a new note yesterday. In this note, Chukumba reiterated a sell rating, as well as a $5 price target on this stock.

Some of the factors playing into this analysis arent good. Chukumba believes that the company may be limited in the levers it has to pull to regain market share and improve the relevance of this company. Accordingly, this analyst sees the potential for a Chapter 11 bankruptcy filing as a very real scenario.

Thats not good for any stock. And while some investors may have been thinking this themselves, seeing it in a note certainly isnt encouraging.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

Chris MacDonalds love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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Is BBBY Stock Headed for Bankruptcy? One Analyst Thinks So. - InvestorPlace