Jim Cramer believes Bed Bath & Beyond Inc (NASDAQ: BBBY) needs to take advantage of its recent surge and commence a stock offering, but he doesn't expect the home furnishings retailer to take action.
What To Know: Bed Bath & Beyond shares have surged amid increased retail investor attention. The stock jumped nearly 40% Aug. 8 on no apparent news. Despite several downgrades following the surge, the stock continued to trend higher following a brief pullback.
Bed Bath & Beyond shares are back at it this week after a filing showed that GameStop Corp (NYSE: NYSE:GME) Chairman Ryan Cohen, who purchased a stake in Bed Bath & Beyond in March, is holding out-of-the-money call options.
According to a CNBC report, Cohen's firm RC Ventures owns calls on more than 1.6 million Bed Bath & Beyond shares with strike prices ranging from $60 to $80 per share.
Related Link: Bed, Bath & Beyond, Blue Apron Skyrocket In Latest Short Squeeze: What Investors Need To Know
Cramer on Tuesday called on Bed Bath & Beyond to issue stock, suggesting the company should issue 20 million new shares. He doubled down on his comments Wednesday morning on CNBC's "Squawk On The Street."
"They have to," Cramer said. "Bed Bath can do an at-the-money sale and save themselves."
At the very least, an offering would be reassuring for the company's vendors who are gearing up to send out holiday items, he said before explaining why he believes an offering is necessary.
"The stock is completely overvalued on the basis of earnings, they have to close a lot of stores [and] they bought a huge amount of stock back very poorly," Cramer said.
He doesn't expect the company to go through with an offering.
"I think that they would rather sink the ship than run afoul," Cramer said.
"There's a whole number of things they could do, but why they won't do it is because they're very unsophisticated, poorly run and they frankly don't know what they're doing."
BBBY Price Action: Bed Bath & Beyond has a 52-week high of $30.06 and a 52-week low of $4.38.
The stock was up 31.49% at $26.87 Wednesday afternoon, according to Benzinga Pro.
Photo: Owen Byrne from Flickr.
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