Thread by @pirateportfo

5 Days to Bankruptcy: Cohen argues a multi-billion $$ valuation of BABY as the Ultimate Destination for Babies. He sells his Bed Bath position in Aug at the start of M&A negotiations. His letter suggests his willingness to hold the board accountable. #BBBY

"Given that BABY is estimated to reach $1.5 billion in sales in Fiscal Year 2023 with a double-digit growth profile and at least 50% digital penetration, we believe it is likely much more valuable than the Company's entire market capitalization today."
($1.6b at time of writing)

"We believe under the right circumstances, BABY could be valued on a revenue multiple, like other ecommerce-focused retailers, and justify a valuation of several billion dollars."

The math presented in the following tweet assumes 550m shares outstanding at Bed Bath.

A revenue multiple of 2x $1.5 billion in BABY sales = $3 billion market cap, or roughly $5.50/share.

2.34x multiple like Chewy, BABY would be valued at $3.5 billion, or roughly $6.36/share.

6.72x multiple like Etsy, BABY would be valued at $10 billion, or roughly $18.18/share.

Cohen refers to BABY as "the Ultimate Destination for Babies", a phrase only used twice with Chewy and GameStop,

"Our own experience taking Chewy from a start-up to the ultimate destination for pets..."
"Maximize Stockholder Value by Becoming the Ultimate Destination for Gamers"

But then on Aug 16th, Cohen sells his entire Bed Bath & Beyond position.

The company makes an announcement the following day on Aug 17th saying,

"We were pleased to have reached a constructive agreement with RC Ventures in March and are committed to maximizing value for all shareholders."

The following day Aug 18th, Bed Bath taps Kirkland and Ellis for help addressing its debt load.

Is it more likely Ryan Cohen quit on a project for the first time in his life? The man who was told no by over 100 funds to finance Chewy? Or is it more likely he was exiting his position to perform an acquisition of BABY?

Reminder: Cohen spent $121 million to own 9.8% of Bed Bath & Beyond, $45 million more risk than the $76 million he spent to become the Chairman of GameStop.

Is he after buybuy Baby in an effort to build a conglomerate aimed to take on Amazon?

Maybe a good time to drop the Teddy DD for those who are curious. Teddy for life.

For those who think Cohen failed to win over the board even with three of his own RC Ventures designees, I offer this quote with which he closes his letter,

"This does not mean, however, that RC Ventures will not seek to hold the Board and management accountable if necessary."

Which means you're calling Ryan Cohen a liar. If you argue he failed to win the Bed Bath board and quit, you're telling me Ryan Cohen is a liar. Awfully weird take for anybody long GameStop. 🤫

Yesterday's Discussion: 6 Days to Bankruptcy w Cohen's Board