BBBY: Bed Bath & Beyond Shares Drop 21% on Reverse Stock Split

The home-goods retailer closed at 81 cents, taking a beating from investors for a controversial move.

• Bed Bath & Beyond finished Monday’s session sharply lower after the company announced on Friday that it’s planning a reverse stock split. First, shares tumbled in after-hours trading, and second, the decline materialized to a 21% loss during Monday’s regular trading.
• A reverse stock split is frowned upon by investors because each outstanding share is converted into a fraction of what it previously was. A one for 10 split, for example, would mean that every 10 shares will be packaged into a single share. It’s usually done to increase share price.
• In the case of BBBY, the struggling retailer opted for this decision in a bid to improve its liquidity and act on its turnaround plans more easily. Its common shares, which had nearly tripled to 3335mn from 1117mn in January, are down 64% this year.