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Bed Bath & Beyond stock plummets after "meme stock" trading fallout - YouTube
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[Applause]
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and there you have it the closing bell
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at the new york stock exchange
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ending another
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week of trading the dow jones was in the
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red all day ending down around 200 290
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points yep numbers still settling there
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it's the same i mean look all red right
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this is the same story for the s p 500
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and then as ba both of them falling
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today uh the s p 500 was down about one
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and a quarter percent nasdaq you saw
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there down almost uh three percent so
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what's
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behind all of this ed butowsky joins us
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he is a managing partner of chapwood
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investments and he's got some uh i'm
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always looking at the background so
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you've got a nice picture of it looks
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like it's not central park but somewhere
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cool in the country welcome
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tell us what was driving the market
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today what was pulling us back
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well i'll tell you this market has been
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all over the place and it's not
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surprising that the market was down
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today because you're starting to see
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earnings momentum slow down and that
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could be because of the economy it could
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be because a number of different reasons
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but you're definitely seeing earnings
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momentum slowing down and the forecast
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for earnings growth getting a little
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weaker which is going to bring the
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market down so we've had a really nice
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month and a half but we're starting to
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see reality kick in and the reality is
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that we have high interest rates and
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slow growth in the economy and because
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of that we're seeing slow numbers on
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earnings
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and also something else to remember is
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that you know the market is not just the
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u.s stock market it's not just the u.s
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economy
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44 of the earnings growth for the s p
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500 companies comes from outside of the
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united states so as a result of that you
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have to look and see how strong the
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world is and the world is slowing so
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you're going to start seeing that find
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its way into negative earnings growth
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for u.s companies which is a real
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negative right and i want to dig into
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sort of a specific interesting story
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today we've been talking about this
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bed bath and beyond stock is plummeting
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after that influencer investor ryan
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cohen sold his entire nearly 10 stake in
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the company so break down the situation
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for us what makes this unique
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well what makes it unique is you know
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ryan cohen is not a traditional uh
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influence in investor or uh i can't
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remember the exact name of it but they
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they get into a company and they try to
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influence the board of directors he's
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not that type of investor he he got into
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this in march and then made a
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call i think on tuesday saying that he
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had bought a lot of options which were
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options in order for the company to go
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higher so the stock went a lot higher
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and then he sold his entire stake so
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there's something fishy about exactly
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how he did this and um so he sold his
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entire position which he had to announce
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because he had a very large position and
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then the stock plummeted and these are
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called meme stocks and if you look at
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bed bath and beyond bed bath and beyond
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is not going to make any money in fact
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they're going to lose six dollars a
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share
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but what you have is you have 41 of the
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stock shorted meaning that people have
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shorted the company and wanted to go
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higher could ryan cohen then be accused
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of market manipulation
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uh i'm not gonna say that on national
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television but i wouldn't be surprised
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if he wasn't investigated uh for doing
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that although i believe he's done
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everything proper in terms of being
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legal but i don't know if it's very
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morally uh strong right
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and it does expose the dangers of meme
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stock trading which have attracted a lot
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of younger people who aren't experts in
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these fields but certainly feel like
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they want a piece of growth you know
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when you look at the fundamentals of bed
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bath and beyond i don't know maybe it
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was too many 20 percent of coupons they
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were putting out in people's mailboxes
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you know they always had those things um
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but but for people who are
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uninformed quite frankly on what the
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fundamentals of companies are there are
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real risks here
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yeah there there are in fact you had a
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hundred million shares trade hands i
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believe it was wednesday but there's
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only 80 million shares outstanding that
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means that they these these young people
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or it could be uh hedge funds actually
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traded many many times multiples of the
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shares that are outstanding that'll tell
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you how dangerous this meme stock uh
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trading is and ryan cohen's not you know
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immune to meme stocks because he is the
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chairman of gamestop which is a very
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very well-known meme stop so he's a huge
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influencer in the meme stock world so he
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knows what he's doing here
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he's not a stranger to this all right ed
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butowsky thank you so much for joining
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us we appreciate your insight thanks ed
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thank you
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