Bed Bath & Beyond (NASDAQ:BBBY) has been a popular stock of late with retail investors. Concerns of bankruptcy haven't been enough of a reason to dissuade investors from taking a chance on the struggling stock. Can the stock be a good contrarian buy, or is there too much risk here?
In the trailing 12 months, Bed Bath & Beyond has incurred a net loss of nearly $1.3 billion on revenue of $6.2 billion. And during that time, it has burned through $607.4 million just from its day-to-day operating activities. That's a perilous position for the company because as of the end of November, its cash and cash equivalents totaled just $153.5 million.
Sales last quarter were down a whopping 33% and heading into a possible recession this year, there isn't a whole lot of hope about the business turning things around. There are reports that bankruptcy could be inevitable for the company as it's looking for lenders to help keep its business operating.
While some investors are seeing this as a contrarian opportunity to take a chance on a beaten-up stock, the reality is that there is significant risk that comes with buying shares of Bed Bath & Beyond right now. Investors could stand to lose their entire investment.
Buying shares of the company is nothing but a huge gamble at this point and regardless of where the stock goes, until and unless there's some reason to believe that the business is on more solid financial footing, investors are better off staying far away from Bed Bath & Beyond.
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