Lecture Notes on Bed Bath and Beyond Investment Community
Key Points
The perception of investors who believe in failing companies as similar to flat earthers.
Introduction of key figures: Ryan Cohen, a prominent figure in investment communities.
Discussion about Bed Bath and Beyond (BBBY) and how the community of investors formed around it.
Investor Behavior
Many investors were enthusiastic about the potential revival of Bed Bath and Beyond when Ryan Cohen bought a significant stake.
Comparisons drawn between BBBY and previous investing hype around GameStop.
A community emerged on Reddit (r/bbby) focused on discussions and sharing theories about the stock.
Ryan Cohen's Influence
Cohen's involvement was seen as a beacon of hope for investors; his purchase of nearly 100% of BBBY shares ignited excitement.
Cohen suggested strategies for turning the company around, mirroring his previous success with GameStop.
Stock Volatility and Decline
Initial excitement led to significant stock price increases, but soon the stock started to drop due to poor performance and accumulating debt.
Cohen's cryptic tweets were interpreted by investors as reassurance, despite share price declines.
Controversies and Legal Actions
After selling his shares, Cohen faced allegations of misleading investors, leading to a lawsuit from disgruntled shareholders.
The perception of Cohen shifted from a hero to a perceived betrayer among some community members.
Community Dynamics
Despite the downturn, many investors doubled down on their investments, driven by conviction and community support.
The community faced mental health challenges, with reports of stress and suicidal thoughts linked to financial losses.
Some members stayed committed to the narrative of eventual recovery or a larger plan.
Bankruptcy Announcement
Bed Bath and Beyond filed for bankruptcy, with many investors facing total loss of their investments.
Community reactions included a mix of disbelief, anger, and continued hope, with some euphoric about potential future profits despite losses.
Misleading Behavior and Community Leaders
Criticism of community figures like PP Seeds, who profited from the community's naivety while promoting unrealistic expectations of recovery.
Discussion about how some leaders in the community leveraged the hype for personal gain, leading to concerns of exploitation.
The presence of a narrative that Ryan Cohen would eventually return to save the company, even post-bankruptcy.
Conclusion
The community surrounding Bed Bath and Beyond exhibits characteristics of cult-like behavior, with members unwilling to abandon the idea of a financial turnaround despite overwhelming evidence to the contrary.
The overall dynamics illustrate the psychological impacts of investing, community belief systems, and the social aspects of retail investing.