Pump and dump
Retail investors take a bath
Good morning, share sleuths. This is your Stock Market Rundown for June 18th, 2024. Thanks for tuning in today. Let’s get into it:
TODAY’S TOP STORY: MEME STOCK FRENZY
Ryan Cohen made his billions by founding Chewy, the pet supplies retailer. But when he briefly became a big investor in a company famous for bath towels and shower curtains, he managed to make eight figures in just five short months—while leaving retail investors feeling like they got soaked.
The drama kicked off in March 2022, when Cohen revealed that he’d bought up 10% of Bed Bath & Beyond, through his investment firm RC Ventures. In a letter to the company’s management, Cohen complained that poor strategy had led to a sales slump, and argued big changes were necessary. Under pressure, Bed Bath’s management agreed to let him appoint three new board members.
Retail investors watching the unfolding activist story followed Cohen into the stock, pushing the price up. Caught up in a meme-stock frenzy, they started reading into his tweets like a psychic gazing into a crystal ball. When Cohen tweeted a moon emoji, they interpreted it as meaning the stock was going “to the moon”.
But in August 2022, Cohen abruptly decided he was no longer into vacuums, toasters, and tea kettles. He quietly dumped his entire stake—scoring a $68 million profit. When the news hit the wires that Cohen was out, the stock plunged, with the price slashed by half within days.
Some retail shareholders who’d piled in were seething at their losses, and attacked Cohen as a “wolf in sheep’s clothing”. A few were so upset they even took legal action.
But Cohen was smart to blow out his position: less than a year later, Bed Bath & Beyond filed for bankruptcy. And last week, Cohen convinced a court to dismiss the shareholder lawsuit against him.
So, while Cohen walked away with millions, all retail shareholders got was a tough lesson: if you’re analyzing emojis rather than the company’s financials, you’re probably going to be left holding the bag.
SO WHAT ELSE IS GOING ON?
Coach USA, an operator of intercity bus lines, has filed for bankruptcy. Their business never recovered from the pandemic… nobody wanted to sit beside a fellow passenger coughing more than the diesel engine.
An office romance could be a career-limiting move: British Petroleum has new rules that employees must disclose “intimate relationships” with colleagues. This comes after the former CEO got canned in 2023 for dipping his pen in the company ink.
In 2024, optimists rule and pessimists drool—at least when it comes to the stock market. With the S&P 500 and Nasdaq benchmark indexes at record highs, there’s never been a better time to look on the bright side.
A lawsuit is charging that Conagra Brand’s fish sticks aren’t 100% fish. Wow, you’re telling me something I buy for $5.99 from the grocery-store freezer is basically edible cardboard? Shocking.
Bye for now, folks. Looking forward to tomorrow morning's meetup. Yours in capitalism, The Axe
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