[HN Gopher] Bed Bath and Beyond files for bankruptcy
___________________________________________________________________
Bed Bath and Beyond files for bankruptcy
Author : lxm
Score : 166 points
Date : 2023-04-25 14:23 UTC (8 hours ago)
(HTM) web link (www.nytimes.com)
(TXT) w3m dump (www.nytimes.com)
| michaelsbradley wrote:
| I went to a nearby store in St. Louis about five months ago on a
| Saturday afternoon. It was sparkling clean (with one exception),
| shelves were stocked bottom to top and many items were marked
| with discounts. But there were only two other customers in the
| store, besides my s.o., while we were in there for around 30
| minutes. The employees seemed to be wandering around with no
| clear tasks.
|
| The exception to overall cleanliness was that a horrible smell
| came from the public mens restroom when I opened the door, and I
| found that one of the toilet stalls was thoroughly smeared
| (floor, stall walls, toilet itself) with feces. It didn't look
| fresh... bleh, so disgusting.
|
| Anyway, after exiting the building I told my s.o. that surely
| BBBY is not long for bankruptcy.
| withinrafael wrote:
| Sad times. Its jam-packed aisles, fake coupons, SodaStream CO2
| return experience, and products were all pretty terrible. But a
| small piece of me will miss the curtains and bedding on display.
| They offered a bit more variety than Costco, Target, Ross, Home
| Goods, etc.
| sizzzzlerz wrote:
| The store in my local mall closed last year and another one I
| occasionally visit had been looking pretty forlorn. Sure signs
| things were looking grim. Too bad. It was a good place to pick up
| kitchen things.
| nate wrote:
| I'm gonna miss it. I always thought it had an interesting Job to
| be Done when I observed my behavior with the store.
|
| We had one a few blocks from my home, and though I order from
| Amazon like I'm trying to win some kind of game, I'd go to BBB
| when I needed something that day and didn't want to spend any
| time on research. It was almost guaranteed that the thing I'd buy
| would just naturally be at the top of a review site like
| Wirecutter and it saved me hours or days of research. Like the
| day my allergies were just nuts and I realized I probably needed
| an air purifier in the house, and an hour later instantly
| obtained the best in class product.
|
| During the pandemic they got away from this model and started
| selling their own copy cat brands. Which some surmise as their
| final nail in the coffin because no one wanted that stuff. It
| broke the original Job I had looked for them to solve.
|
| Wonder if there's something that will fill its place. I also
| thought b8ta had another interesting place there. Instant
| purchase of something that's on a list you often trust without
| need to actually research. But clearly it's tough doing retail
| even with a bunch of fans.
| ghaff wrote:
| It seems to be a tough category. As I mentioned in another
| comment, another 500+ store chain in this category went
| bankrupt maybe a couple decades ago. Some of it may be
| demographics. I would assume their typical demographic is
| probably thirty-something to maybe 40-something couples.
| Younger people are mostly not outfitting houses with mid-tier
| nice stuff and older people mostly have all this crap and may
| need an occasional replacement but not much more than that.
|
| These days I mostly go to a review site like Wirecutter or a
| sister site, a food blog, or somewhere like Cook's Illustrated
| and mostly order whatever they recommend and it's fine.
| rblatz wrote:
| That's the role Costco has been filling for a lot of Americans
| recently. Most of the time you are going to find something at a
| decent price, that may not be best in class but at least it's
| going to be near the top of the price/utility curve.
| dv_dt wrote:
| re: price/utility curve
|
| That's so correct. Every other retailer it feels like wants
| to focus on competing on price by ever lower quality. I
| strongly prefer paying more for higher quality of things are
| not junk. Low quality is a waste of resources and of my time.
| paulddraper wrote:
| 100%
|
| You might not find what you're looking for at Costco.
|
| But if you do find it, you can be confident it's a great
| value.
| el_benhameen wrote:
| I've switched a large percentage of my shopping to Costco for
| this reason. Like Amazon, I can return it no questions asked
| if it sucks. Unlike Amazon, it probably won't suck.
| Clamchop wrote:
| I struggle with Costco's inconsistent assortment of products
| and poor online presence. I don't like going there to be
| crowded for two or three hours only to walk out with $300 in
| impulse purchases (I am weak, especially to food) but not
| what I came for.
|
| And they're not good for all things. Their furniture might be
| reasonable quality but none of it belongs in my home, for
| example. Gigantic and dated-looking.
| JoeAltmaier wrote:
| Local manager says they have room on the shelves for 4000
| products. If something new comes along their customers
| might like, something has to go.
| woeirua wrote:
| The big loss here is Buy Buy Baby. They really had a nice market
| niche that they were filling but Bed Bath and Beyond wrecked it.
| Now I have no idea where you will go to see and buy nicer baby
| items in person.
| floren wrote:
| Nordstrom has a small selection of high-end baby stuff. There's
| also Pottery Barn Kids if you really hate your wallet.
| unstatusthequo wrote:
| What will our mailboxes do without all those huge coupon sheets?
| zackmorris wrote:
| I have no great love for BBB, but they saved me countless times
| when I was looking for last-minute gift ideas. The store closest
| to me was always packed, and prices were just enough higher than
| other stores that I figured they were making bank. As the #1
| place people think of for just about anything domestic, I don't
| know how they could be mismanaged so badly that the whole chain
| goes under?!
|
| On the flip side, they remind me of all of the ills of the 2000s:
| McMansions, SUVs, 19 Kids and Counting, excessive wedding
| registries, homogenization of cities, globalization, just on an
| on, a fiscally liberal/socially conservative vision of 'Merika
| which I don't subscribe to. So I guess it makes sense that they
| imploded as people abandoned materialism post-pandemic?
|
| I think most brick and mortar stores will close by end of decade.
| To be replaced by drone delivery and service work until 3D
| printed androids take over those jobs too. Commercial real estate
| may never be priced higher than it is right now. It will be
| curious to find out what's keeping rents so high, but I suspect
| that money is funding retirements and policing the world. When
| young people pull the plug, it will be interesting to watch more
| entrenched power structures crumble.
| ghaff wrote:
| >I don't know how they could be mismanaged so badly that the
| whole chain goes under?!
|
| They're not the first. Linens n' Things was another big chain
| in a similar vein that went bankrupt.
|
| Mostly I went into Bed Bath and Beyond if I wanted to actually
| look at and touch cooking utensils. Their selection tended to
| be better than places like Target. (Sur la Table is another
| chain for that kind of thing but there seem to be fewer of
| those around.)
|
| I assume Bed Bath and Beyond's revenue skewed towards couples
| setting up a first home.
| cjohnson318 wrote:
| > 19 Kids and Counting
|
| I think the birthrate in the US has been falling consistently
| for years and years. After people have one kid, they realize
| how expensive childcare is, and usually don't have more than
| one more.
| no_wizard wrote:
| It was a TV Show[0]
|
| [0]: https://en.wikipedia.org/wiki/19_Kids_and_Counting
| cjohnson318 wrote:
| Oh, from the context I assumed GP was listing general,
| pervasive trends from the 2000s.
| treeman79 wrote:
| If one spouse stays home, it's not much more to have multiple
| from a day to day perspective.
|
| If you put in the effort to teach kids to manage age
| appropriate chores, the workload can be kept sane.
| netrus wrote:
| Having one spouse at home is a tremendously expensive form
| of child care, from an economists point of view. But the
| cost is mostly flat with the number of children, that's
| true for sure.
| treeman79 wrote:
| Not really. Lower tax rates for remaining spouse. Huge
| reduction in food expenses from having time to cook at
| home.
|
| Cost of childcare for even 1 child is huge. Unless spouse
| is making major money, it just isn't worth it from a
| money standpoint.
| vkou wrote:
| > Huge reduction in food expenses from having time to
| cook at home.
|
| Most people already cook most of their food at home,
| regardless of whether they have children.
| cjohnson318 wrote:
| > If one spouse stays home, it's not much more to have
| multiple from a day to day perspective.
|
| Sure, if you're the one working. Even with both of us
| watching our kids at the same time, it's still exhausting
| to keep up with them. The hardest days of my week are
| Saturday and Sunday.
| paulddraper wrote:
| > 19 Kids and Counting
|
| Reality TV aside, U.S family size hit an all-time low (3.13) in
| 2003, and has stayed there since.
|
| And the birth rate has failed to attain replacement since the
| early 70s.
| mathgeek wrote:
| > U.S family size hit an all-time low (3.13) in 2003
|
| Do you have a reference for this? Would love to see what the
| metric is based on (e.g. does it assume two parents, meaning
| 1.13 children).
| SkyPuncher wrote:
| I've found they always ended up in this weird "quality" gray
| area.
|
| They sell a bunch of mid-tier items that don't really offer any
| actual quality or value over low-tier items. For items I really
| care about, I can spend a bit more and get an actual, high
| quality item.
| jandrese wrote:
| Did they get bought out by a private equity firm? That's
| usually a death knell for a company.
| sethd wrote:
| > people abandoned materialism post-pandemic
|
| Please don't take this the wrong way, but you might be living
| in a bit of bubble.
| andrewmcwatters wrote:
| Anecdotally, the last time I went to Bed Bath and Beyond, it was
| an absolute ghost town.
|
| No one was there, the prices were absolutely garbage, and the
| inventory was no better than anything you'd find literally
| anywhere else.
|
| I looked around and thought to myself, "Wow, I bet their
| corporate rent costs a fortune to just be here, and they're
| probably burning cash hand over fist."
|
| I'm not surprised in the slightest. Constantly amazed by
| businesses who seem to "still be in business," but the writing is
| on the wall and they're clearly zombie companies[1] or two feet
| in the grave.
|
| [1]:
| https://www.google.com/search?q=is+bed+bath+and+beyond+a+zom...
| darkhelmet wrote:
| It's not just BBB. This description could apply to a good
| number of chain stores these days. There are exceptions but
| this seems to be an increasing trend. There are ghost town
| stores everywhere you look.
|
| If I make a trip to (for example) Target, it feels nothing like
| Target of 20 years ago. The chances are good that they don't
| have what I hoped to find there. I'm getting used to being
| regularly disappointed and am learning to plan around waiting
| for an Amazon delivery.
|
| This seems to be a vicious circle. The thing stores had which
| Amazon didn't was that they used to have a decent selection of
| things you could get " _right now_ " and they're giving up on
| that niche to try and compete on price. I don't see this ending
| well.
| KoftaBob wrote:
| >If I make a trip to (for example) Target, it feels nothing
| like Target of 20 years ago. The chances are good that they
| don't have what I hoped to find there.
|
| What are some examples of products you've had this issue with
| at Target? This sounds like the exception rather than the
| rule based on the positive way most people talk about Target
| both around me and on social media.
| wobbly_bush wrote:
| > If I make a trip to (for example) Target, it feels nothing
| like Target of 20 years ago.
|
| I'm curious how did Target feel like 20 years ago?
| bombcar wrote:
| They didn't have groceries and they weren't quite as
| "upscale" and were busier, if I remember correctly. But I
| don't mind them much. Except for pricing stupidity.
|
| Also toys are much bigger now because Toys R Us died.
| MH15 wrote:
| I agree with this assessment but not on the Target
| conclusion. I'm sure it's quite dependent on the neighborhood
| but both the Targets by me are always busy and often packed.
| coffeebeqn wrote:
| If you're near lots of families with kids then the target
| is likely quite packed
| linsomniac wrote:
| >The prices are garbage
|
| I get the feeling that BBB, like Kohl's and Joann's, are places
| you just don't shop unless you have a coupon, because there's
| always a 30% coupon.
| no_wizard wrote:
| Kohl's doesn't have great coupons unless you have a credit
| card with them anymore. I used to shop there alot for the
| sales + coupon at the end of each season, and now its only
| worth it if you have a credit card with them
| tobias2014 wrote:
| Add Michaels, same story with always 20% off. They even have
| those coupons to scan at the registers, you just have to
| mention it.
| toomuchtodo wrote:
| https://archive.is/EtJGh
|
| Previous: https://news.ycombinator.com/item?id=35675373
| bearjaws wrote:
| This is a huge loss IMO, buying kitchen supplies and bedding on
| Amazon is complete shit. Target isn't much better due to lack of
| variety and types of bedding.
|
| I've bought the same bed sheets for 5+ years, a few months ago I
| bought new ones since some bleach got spilt on one set, it comes
| in and I could tell immediately the quality was far worse.
|
| One wash later, its ripping & fraying. Thankfully I could return
| them. Sure enough the seller is a fake typo squatted version of
| the original seller.
|
| This isn't even my only example, bought a kitchen cutlery set
| from Amazon during the pandemic since my old one had the handles
| separating. I get the new set, ONE run in the dish washer and
| they start to RUST. Hundreds of positive reviews of course.
|
| BBB always had high quality (and expensive) items, I had my last
| set of BBB cutlery for over a decade.
| pavon wrote:
| I greatly preferred JC Penny Home Store as it had better prices
| than BBB but better selection than general stores like
| Target/Walmart (and I often liked the bedding/curtain patterns
| they carried better). Unfortunately their financial troubles
| caused them to consolidate the Home Store into their main
| stores, and the selection is now no better than those later
| options, and I've thus been going to BBB more often.
|
| I hope this is a restructuring and not a shutdown. It will be
| crummy for there to be no stores filling the gap between Target
| and William Sonoma.
| MandieD wrote:
| "The gap between Target and Williams Sonoma" is a decent
| summary of my frustration with an awful lot of product
| selection in both the US and in Germany.
| bombcar wrote:
| Williams Sonoma always feels like the sky mall catalog;
| overpriced and basically as crappy. It's quite annoying to
| find actually good products- it's usually still possible
| but takes some serious digging.
| SoftTalker wrote:
| I agree about Amazon (I never buy anything there anymore) but
| BBB was pretty shit too, in terms of products. Lots of plastic
| garbage made in the third world, maybe a few name brand
| untensils and small appliances.
|
| Last things I bought there were new pillows, they turned into
| bags of cement within a few months.
| Hasz wrote:
| IMO, Costco does a good job of balancing quality and price.
| jandrese wrote:
| But terrible at offering selection. If you don't like the
| color, well, tough because that's the one they stock. Maybe
| if you're lucky they'll have a second color or style for
| sale.
| Gunnerhead wrote:
| Or: You saw it last week? We'll, too bad. We have a
| completely new set for sale today.
|
| I say this as a huge Costco shopper and fan. Serendipity
| and spontaneity is the name of the game at Costco.
| Invictus0 wrote:
| That's what sheets are for...
| crazygringo wrote:
| No, BBB had _low_ quality crazy overpriced items.
|
| Yes it was good to be able to see and try items before buying,
| but then they'd just fall apart.
|
| With Amazon, yeah it sucks I sometimes have to return things
| because you couldn't try it in person. But on the other hand, I
| wind up buying _much_ higher quality items on Amazon, and at a
| cheaper price, because the top 15 reviews together usually give
| really solid feedback on how the item is holding up after a
| year or two.
|
| When there are 500 or 5,000 reviews on an item, you generally
| know what quality you're going to get. At BBB that was never
| the case. Especially with so many items manufactured
| exclusively for BBB.
| kyrra wrote:
| They used to have higher end stuff, but shifted to different
| brands over the last few years. See:
| https://www.wsj.com/articles/bed-bath-beyond-ceo-private-
| lab... (https://archive.is/xacpG)
| solarmist wrote:
| BBB had high prices, but I've never gotten the impression
| that there was anything low quality.
|
| Besides the as seen on tv crap they added over the last few
| years.
|
| EDIT: I didn't know about the store brand push.
| crazygringo wrote:
| It wasn't just the store brands that came more recently,
| but the longtime "name" brands that made lines of items
| exclusively for BBB. This was especially the case with
| things like bedding, shower curtains, towels, bathmats,
| anything with memory foam, and so forth. They were just
| overpriced crap, you'd discover after a few months.
| crooked-v wrote:
| I tend to find myself extremely dubious of Amazon reviews for
| anything but a brand I know and more-or-less trust already.
| There's just too much product listing manipulation and too
| many fake reviews.
| Sohcahtoa82 wrote:
| I think it really depends.
|
| If an item is 4.5 stars with over 10,000 reviews, I find
| it's pretty trustworthy.
|
| It's when it has under 100 that I raise an eyebrow. Under
| 20, and it's most likely fake.
| fshbbdssbbgdd wrote:
| Have you been to BBB lately? They tried to pivot to store
| brands, people didn't like that, then they tried to pivot back
| to name brands but couldn't afford the inventory. That's why
| they are bankrupt.
| ytreyrty wrote:
| wal mart and department stores exist. bed bath and beyond was
| almost always super overpriced, and the quality on a lot of
| things isnt the best.
| Entinel wrote:
| Target is much better than Amazon They may not have the wide
| variety you want but what they do have is good enough for the
| price.
| bombcar wrote:
| Just be sure to scan the in store barcode and make sure it's
| not cheaper on target.com; it often is and they you have to
| ask for a price adjustment after purchase.
| elhudy wrote:
| If you want high quality home goods from amazon then you have
| to search for high quality materials: silk, linen, wool.
|
| Same for knives: damascus steel, high carbon steel, etc.
|
| If you just search for knives or sheets, or even cotton/bamboo
| sheets, the results are all a commoditized race to the bottom
| on price.
| WillPostForFood wrote:
| If you want kitchen supplies, brick and mortar, and quality,
| Sur La Table and Williams Sonoma are both better then BB&B.
| Arrath wrote:
| God help me if I ever took my GF to Sur La Table, I'd need a
| line of credit handy.
| mrguyorama wrote:
| Girlfriend and I bought new, $30 "jersey cotton" sheets from
| Target. They are already piling and we only had them 2 months.
|
| Everything is made to be trash nowadays.
| sieabahlpark wrote:
| [dead]
| mosdl wrote:
| Agreed, you basically now only have discounters who sell in
| store small appliances/kitchen supplies. It must not be
| profitable enough since there are really no other stores in
| that market other then BBB.
| Encrypt-Keeper wrote:
| Not sure what you mean, most if not all department stores
| today sell small kitchen appliances and supplies. From Target
| and Walmart to Macys
| bombcar wrote:
| Best Buy (!!!) has great deals on appliances especially
| clearance.
| dragontamer wrote:
| They call stores like Bed Bath and Beyond a "category killer"
| for a reason.
|
| If a BBBY hits your mall, there's no point selling appliance
| / kitchen supplies there. You simply can't compete.
| Finnucane wrote:
| If your store is clean, reasonably well stocked, and has
| minimally competent sales staff, you might be preferable to
| a BBBy.
| dragontamer wrote:
| Today, sure.
|
| But I'm talking about even in October 2022, just a few
| months ago. No one was going to open a bedding store when
| BBBY was within walking distance.
| Finnucane wrote:
| No, we're going to order from LL Bean. We gave up on BBY
| years ago, the service has sucked for a long time.
| selectodude wrote:
| Does LL Bean sell frying pans now?
| Finnucane wrote:
| https://www.globeequipment.com/
| Animats wrote:
| I want to buy a mattress. Mattress review sites are all phony.
| Amazon is all phony reviews. Mattress FIRM is hugely
| overpriced. Bed, Bath, and Beyond's brands were just names
| they'd acquired. That entire industry has managed to shoot
| itself in the foot. Probably better to order from an actual
| manufacturer on Alibaba.
| pseg134 wrote:
| The only place to get a new mattress these days and not get
| ripped off is Costco
| Animats wrote:
| They're still 5x more expensive than Alibaba. Which is
| where most mail order mattresses come from. Making a
| mattress costs under $100.
| gamblor956 wrote:
| Alibaba is super cheap because you're buying the literal
| bargain basement version of the product, and what you're
| getting almost always violates local product safety laws
| that domestic manufacturers and/or sellers must contend
| with.
|
| Yes, the mattress at Costco is 5x the price. But it's
| probably 20x the value.
| somehnguy wrote:
| My experience is the opposite - I've bought the exact
| same products from Alibaba that I could have gotten on
| Amazon for 4x the cost. The only difference being random
| brand printed on the plastic.
| bombcar wrote:
| It depends on the product. All those random USB C docks
| and hubs? Sure, you can find identical ones on baba. But
| there are products that aren't really available. I'm sure
| you can get stuff identical to Harbor Freight, but
| actually identical to Milwaukee or Dewalt? A bit harder.
| garyfirestorm wrote:
| Try Avacado Mattress. I genuinely love the product and if you
| were to believe their spiel it's probably sustainable and eco
| friendly...
| astura wrote:
| $2,000 for a queen sized mattress? No thank you.
| wincy wrote:
| During the pandemic I bought a $500 mattress from Amazon but
| didn't like it. So they just gave it to me for free and
| refunded my purchase. So now I'm sleeping on a free mattress
| that I don't really like but it was free.
| Animats wrote:
| The seller probably paid about $60 for that mattress.
| jandrese wrote:
| Mattresses are a huge racket in general. Think about how
| often you need to buy a mattress and then consider how many
| stores in you area sell only mattresses out of expensive
| storefronts full of salesmen. The margins per mattress have
| to be astronomical to support a business model like that. But
| on the other hand they are very heavy and bulky which makes
| them expensive to ship and since people generally need to try
| several out before finding one that is comfortable they
| aren't great for an online business model.
| crooked-v wrote:
| The places like that around here seem to make their money
| off expensive massage recliners and other deluxe furniture,
| where the mattresses are just there to get people in the
| door every so often.
| jwozn wrote:
| I went to a hotel and loved the mattress so I emailed them,
| and it was a Classic Brands Cool Gel. I bought one and am
| very happy with it, and it was relatively cheap compared to
| some of the DTC brands out there and extremely cheap compared
| to mattress stores. You can get it on amazon but some of the
| branding is confusing. I think we bought the Cool Gel Chill,
| although a quick glance online shows there are fairly
| similar. I also recommended it to some of my family and they
| are happy with the choice.
|
| The hotel was also great. If you're ever in Houghton in the
| UP of Michigan, I would highly recommend the Vault hotel.
| bombcar wrote:
| this is relatively common, some hotels even list the brand
| on the website and I've seen one that had a coupon.
|
| Nothing like spending a night or few on the mattress to
| test.
| noncoml wrote:
| Arizona Premium Mattress. It's basically, build your own
| mattress. Only down side, they are slooooooooow
| bombcar wrote:
| Ah but they don't offer the Alaskan King! Because a
| mattress nine feet on a side is what everyone needs.
| goostavos wrote:
| Also, FYI, with mattress firm, your warranty is null and void
| if you ever spill anything on your bed. I bought a mattress
| from them and within a year, in the literal use of the term,
| came apart at the seams. One night I woke up and my elbow
| was... _in_ the bed rubbing against a spring.
|
| I assumed such a structural failing would be under warranty,
| but they rejected it because of a roughly 2" stain on the
| mattress. Apparently, that stain was structural. I'm still
| salty about it.
| cjohnson318 wrote:
| My bed developed a huge sink hole within three months. I
| was able to take it back, but c'mon. I'm average weight,
| and I bought the mattress brand new. We paid an arm and a
| leg later for a Sleep Number and it's been totally fine for
| years and years.
| treeman79 wrote:
| Small claims court.
| bb123 wrote:
| Ikea is a good option in this market. And generally for
| household basics.
| contingencies wrote:
| Agree, their mattresses are decent. Bought an expensive one
| from a seller with a guarantee recently, had to refund it
| as it sucked which turned in to a month long process. In
| the end, it was donated to charity and replaced from Ikea.
| Ikea's come in only two styles: firm (IMHO commonly
| ordered, more profitable for Ikea, but less likely to be
| considered comfortable by more than one person and more
| likely to lose shape) and extra firm (safe for more than
| one person, lower profit margin for Ikea, typically longer
| lasting).
| justinpombrio wrote:
| Consider the Foam Factory. We've bought a mattress and
| separately a foam topper from them and they've been great.
| You can tell they're legit because their products are listed
| in _tables_ and because the styling on the website is
| completely out of fashion.
|
| https://www.thefoamfactory.com/mattress/memorymattress.html
| Sohcahtoa82 wrote:
| Holy hell you're not kidding. It's like I'm browsing a site
| in 1999.
|
| It's pretty refreshing, though. The entire page loads in
| under 1/4 of a second for me.
| [deleted]
| Kamq wrote:
| > You can tell they're legit because their products are
| listed in tables and because the styling on the website is
| completely out of fashion.
|
| I have noticed that the closer something looks to a 1995
| HTML skeleton, the more I trust it these days. I assume
| anything else has been run through a layer of marketers.
|
| I wonder if they're ever gonna pick up on that?
| cjohnson318 wrote:
| Totally agree. Online shopping is only going to get worse: more
| expensive, less quality, harder to return. On the other hand,
| brick and mortar places are going to have less variety, and
| lower quality. You'll spend more time driving all over town to
| return things or driving all over town to find simple things in
| stores. Fifteen years ago Target had some pretty solid clothing
| options, but now it's basically only good for t-shirts and
| underwear.
|
| I just want to go to a store that has what I need, at the right
| level of quality, with enough clerks working at any given time.
| I'll pay extra for that.
| trog wrote:
| > Totally agree. Online shopping is only going to get worse:
| more expensive, less quality, harder to return. On the other
| hand, brick and mortar places are going to have less variety,
| and lower quality
|
| What I am hoping might change things is a near-total collapse
| in the value of commercial & retail real estate. This is
| clearly already happening and doesn't show any signs of
| slowing - who is going to take a long term, expensive lease
| on retail real estate now?!
|
| But once prices have collapsed & property owners are forced
| to adjust to the new reality, I'm hopeful it might lead to a
| bunch of new competitors able to roll the dice by focusing on
| smaller scale speciality stuff, which will eventually grow.
| Kinda like capitalism has promised forever, except maybe this
| time it might actually happen?!
| alx__ wrote:
| You're right on their cookware and bed sheets. But the rest of
| the store is basically Amazon trash in a retail store :(
| DTanner wrote:
| Just watched a documentary about a deranged BBBY superfan:
| https://www.youtube.com/watch?v=yrU0DAAylEk
|
| In one of his videos I he was standing in an empty parking lot
| shouting into a megaphone that Bed Bath & Beyond would never go
| bankrupt. I think he did the same thing in front of Lehman
| brothers (minus the megaphone).
| this_user wrote:
| He has also been stalking the BBBY CEO, but has now made his
| Twitter account private, and has delete a lot of his YT videos
| from the last few months.
| aliljet wrote:
| This is surprisingly old news, but still somewhat interesting.
| I'm curious what led to this being posted today?
| jedberg wrote:
| Yesterday was the last day to use the coupons. They officially
| enter bankruptcy today.
| tpmx wrote:
| Sona (Conan) is going to miss them. Sorry in advance for the
| niche reference.
| jedberg wrote:
| I feel like the Venn diagram of HN users and Conan podcast
| listeners is nearly overlapping circles. :)
| tpmx wrote:
| Yeah, amongst us old people over the age of, say, 35 :)
| dragontamer wrote:
| BBBY defaulted on its debt in December.
|
| Defaulting doesn't mean bankruptcy however. The bondholders
| could legally start the bankruptcy process, but presumably the
| bondholders wanted to see how the stock-selling deal would pan
| out.
|
| Now that the shares are under 20-cents and an additional 600+
| million shares have been dumped to the market (from ~117
| million in December 2022 to over 700-million today), its clear
| that the shareholders have been tapped out.
| ketzu wrote:
| AFAIK it is the newest meme stock, it popped up on the reddit
| front page the previous few days.
| michaelmcdonald wrote:
| BBBY has been a meme stock for quite some time over the last
| couple of years.
| jutrewag wrote:
| [dead]
| kube-system wrote:
| It has been a meme stock at least since the whole gamestop
| thing in 2020/2021
| ketzu wrote:
| Back then the three big ones seemed to be Blackberry, AMC
| and Gamestop. If r/BBBY stats is anything to go by, I would
| say it wasn't that popular before mid 2022 [1] and is
| gaining traction since january. But it might have been
| bigger than I noticed.
|
| [1] https://subredditstats.com/r/BBBY
| humanlion87 wrote:
| They officially only filed for bankruptcy this weekend.
| Everybody (except the retail investors who were buying their
| stock offerings) knew this was coming.
| bookofjoe wrote:
| >Individual investors who continued to back Bed Bath & Beyond
| during its final months, when it was flooding the market with
| shares, will likely be wiped out in chapter 11, which
| prioritizes the repayment of debt over shareholder
| recoveries.
|
| Source:https://www.wsj.com/articles/bed-bath-beyond-files-
| for-bankr...
|
| https://archive.ph/tSjT1
| [deleted]
| rossdavidh wrote:
| It's kind of like when you see a headline that "So and So Has
| Died" and you think to yourself, "so and so was still alive?"
| nickthegreek wrote:
| Nothing quite like a BBB store closing sale. I've gotten some
| great items at 40% off over the past few years as they have been
| closing stores. Only 1 left around me, which is about to close.
| addaon wrote:
| 40% off actual price, or 40% off list price? Keep in mind this
| is a company whose business model is to add 20% beyond normal
| retail price to all items, then distribute 20% off coupons to
| the entire population of the inner solar system so that people
| feel like they're getting a "deal" by reducing items to their
| normal retail margins.
| jjeaff wrote:
| The standard practice for store liquidation is to raise all
| prices to full MSRP, then start out with a 20% or so
| storewide discount. Then you start discounting incrementally
| as products sell off.
| ghaff wrote:
| The companies that run liquidations know what they're
| doing. While there's still a lot of stock in the store, the
| "bargains" that people rush in to get mostly aren't. And,
| by the time there are genuine bargains, things have been
| pretty picked over and I also suspect a lot of people buy
| bargains at that point that they don't need and wouldn't
| otherwise get.
| bombcar wrote:
| Exactly. The best bargains I've gotten at actual
| liquidations (not store closings which are often manned
| by the store itself and not a liquidator) have been the
| things nobody knew how to price. Like buying the displays
| or similar.
| hackingthenews wrote:
| What is the chance that someone saves them from bankruptcy?
| coffeebeqn wrote:
| I mean maybe some private equity company sees some dirty
| arbitrage in looting the corpse at best
| bombcar wrote:
| Not zero but I would expect someone to just buy the name from
| the liquidators instead. Say if Home Depot decided they wanted
| to expand the furnishings/decor side.
| [deleted]
| AlbertCory wrote:
| Someday, all those 20% off coupons they mailed out will be as
| quaint a collector's item as the America Online CD's.
| sokoloff wrote:
| I've still got a bag with about 4 or 5 CueCats in it.
| bombcar wrote:
| I'll go one better - I have live still open RadioShack
| nearby!
| humanlion87 wrote:
| I find the whole situation fascinating. Bed Bath continued to
| sell hundreds of millions of shares while they were preparing for
| bankruptcy and retail investors (or meme stock investors)
| continued to buy them. I assume Bed Bath did all the paperwork
| that is necessary (like calling out risks, that the raised
| capital will go to creditors first, etc) for such a stock sale.
| But it is clear they were doing it out of bad-faith to the new
| investors.
|
| As usual Matt Levine's take on this is a good read.
| fullshark wrote:
| What was the premise behind buying a stock for a company headed
| for bankruptcy?
| [deleted]
| stusmall wrote:
| There are two big ones.
|
| 1) There is a lot of volatility in this period. There is
| money to be made at buying in and dumping it at a small,
| local spike. A lot of the money is made off others trying the
| same game.
|
| 2) Some of these meme stock investors have been sold a bill
| of goods. Go check reddit.com/r/bbby to see what I mean. Some
| of them believe this is a larger conflict between good and
| evil. There is a belief that will be some eleventh hour deus
| ex machina event where Ryan Cohen will reveal this is all
| part of his long term scheme to defeat Citadel or whatever.
| The shifting narratives are insane, hard to follow and even
| harder to explain. It's basically financial qanon and it's
| really sad to see. The execs of some of these meme stock
| companies know exactly what is happening and are very happy
| to release unethical, vague statements to feed into the
| fantasy. But the apes are still buying in to prep for this
| apocalyptic event.
| dragontamer wrote:
| Meme stock traders thought they had another Hertz coming.
|
| Hertz was going into bankruptcy in 2020, as the pandemic
| wrecked their finances. But then in 2021, in the middle of
| the bankruptcy, it turned out that their fleet of millions of
| used cars skyrocketed in price, saving the company from
| bankruptcy. Some other company purchased Hertz before the
| bankruptcy finished and Hertz shareholders then reaped the
| rewards as the stock climbed from pennies into $7.
| pram wrote:
| Profiting from a short squeeze. They basically load up on the
| shit stock like lottery tickets because they believe the
| price will eventually skyrocket. This is why they're willing
| to delude themselves for months and years.
| jutrewag wrote:
| [dead]
| vkou wrote:
| Through a combination of divination by star signs and chicken
| entrails, reddit determined that the bankruptcy is fake, the
| business is actually amazing, and the only reason everyone
| thinks the company is doomed is because it is being shorted
| by bad people.
|
| If they just buy and 'hodl', the shooters will get squeezed,
| and all the holders will make infinity dollars.
|
| After buying mountains of stock, they've come up with insane
| theories for why this isn't a real bankruptcy, why some angel
| is going to come in at the eleventh hour to rescue their BBBY
| and how they will all get 1:1 shares in the angel's firm.
|
| It's flat earth/rapture insanity, except these people are
| financially invested into their delusions.
| wwweston wrote:
| > the only reason everyone thinks the company is doomed is
| because it is being shorted by bad people. > If they just
| buy and 'hodl', the shooters will get squeezed, and all the
| holders will make infinity dollars.
|
| If there isn't already social sciences literature on The
| Unreasonable Effectiveness of Enemy Narratives, there
| should be, and I'd like to read highlights that exist.
| BeFlatXIII wrote:
| That's why I call it the stock market casino. Don't invest what
| you can't afford to lose.
| cush wrote:
| What's Matt Levine's take?
| exsf0859 wrote:
| He's covered the decline of BBBY many times in his
| newsletter, explaining the financial details and shaking his
| head each time.
|
| His Monday April 24th, 2023 newsletter, titled "Bed Bath
| Moves Beyond", covers the situation once again. It ends:
|
| "Bed Bath saw that its retail shareholders wanted to throw
| their money away, and that its sophisticated lenders wanted
| to get their money back, and realized that there was a trade
| to be done that would make everyone, temporarily, happy. So
| it did the trade. It's amazing. The lawsuits are gonna be
| great."
| Sniffnoy wrote:
| Could you link it, instead of just quoting it?
| mrguyorama wrote:
| >The lawsuits are gonna be great.
|
| Why can you be sued because idiots convinced themselves you
| were a good buy while you were showing everyone your
| terrible finances?
| vkou wrote:
| Because you aren't allowed to sell stock in advance of
| your bankruptcy filing.
|
| BBBY did this in a roundabout way, by signing a deal with
| HBC, where HBC sells BBBY stock in exchange for cash...
| justincormack wrote:
| Everything is securities fraud, as Levine likes to say.
| bonzini wrote:
| Probably
| https://www.bloomberg.com/opinion/articles/2023-03-30/bed-
| ba...
| toomuchtodo wrote:
| https://archive.is/svqGg
| bookofjoe wrote:
| >I assume Bed Bath did all the paperwork that is necessary
| (like calling out risks, that the raised capital will go to
| creditors first, etc) for such a stock sale.
|
| I'm not clear on why your next sentence is:
|
| >But it is clear they were doing it out of bad-faith to the new
| investors.
|
| Where is the "bad-faith" in caveat emptor?
| bombcar wrote:
| You know those Prop 65 warnings you see on everything? It's
| the difference between a company sticking it on everything
| "just in case" and a company with the CancerTron-9000(tm)
| rebranding as "edible low-fat sweets" with that label on it.
|
| _Every single filing with the SEC contains language that is
| basically 'holy shit we could go bankrupt tomorrow because
| billions of reasons'_ - that's different from "we know we're
| going down, but we can fleece people on the way down" -
| though it will be hard to prove criminally in a court for BBB
| and GameStop, likely.
| cratermoon wrote:
| My favorite of the moment is 'gluten free'. Seen on things
| that physically cannot have gluten in them, unless it's
| contaminated somehow.
| garyfirestorm wrote:
| Yes that's because they could share same production lines
| where other products containing gluten could cross
| contaminate.
| bombcar wrote:
| Have they changed the rules? Because I've seen "gluten-
| free" corn chips that also have the standard boilerplate
| about how they may have been packaged on equipment that
| also processes tree nuts, wheat, etc.
| hef19898 wrote:
| It started with vegan and then lactose free. But hey,
| free marketing for a ton products, right?
| slaw wrote:
| I remember times when everything was cholesterol free. I
| even started joking I am buying cholesterol free
| gasoline.
| menage wrote:
| But cross-contamination in a shared production facility
| can happen fairly easily (and is important for folks who
| are sensitive to a few parts-per-million of gluten),
| hence why lots of packets have that warning in the small
| print. An obvious "gluten-free" label means that the
| producer is asserting that this cross-contamination
| hasn't occurred and you don't have to search the small
| print.
| cratermoon wrote:
| That's true, and I made a conscious decision not to
| mention cross-contamination, knowing that the hn
| community would fill in the gaps.
|
| The short answer is that no, the label gluten free alone
| does not say anything about cross-contamination.
| larkost wrote:
| From what I understand gluten intolerance (including
| Celiac disease) is not at all like allergies where even a
| small amount of cross contamination can be harmful (or
| even deadly). Gluten intolerance really needs a solid
| amount (which many foods provide) to trigger problems,
| and the worry is really the long-term damage that can be
| done.
|
| So I think that the "gluten-free" labels on things that
| obviously would not have gluten in them (e.g.: bottled
| water) is absolutely about advertisement to people who
| have been trained to think that "gluten-free" is always a
| good thing.
| zo1 wrote:
| I've seen "vegan" dishwasher soap, too.
| stametseater wrote:
| A lot of soap is made out of animal fat. Less these days
| than before, and I doubt any dishwasher soap is, but I
| suppose you could.
| steveklabnik wrote:
| In some contexts, vegan and cruelty free blend together;
| they probably were trying to signal that they do no
| animal testing while making the product.
| Tyrek wrote:
| BBBY has issued multiple warnings of bankruptcy, far beyond
| the disclosures 'standard SEC language' that other
| (healthier) companies file on a regular basis.
| kube-system wrote:
| I have a hard time feeling sorry for any retail investors who
| made the decision to buy BBBY on their own.
| draw_down wrote:
| [dead]
| gizmo wrote:
| Bed Bath followed the email scammer strategy of making their
| scam so obvious only the most financially illiterate people
| could fall for it. Hard to pull of, but once you've got an
| investor base that's willing to believe anything you can dilute
| them repeatedly and they'll still believe it's 5D chess.
| BaseballPhysics wrote:
| Eh, frankly, I think that does a disservice to the people
| buying the stock.
|
| Were a bunch of people buying into the meme stock hype? Sure.
|
| Does that make them financially illiterate?
|
| Well, the folks who bought Hertz sure look pretty damn smart
| in hindsight even though at the time they were being
| described in similar ways, so... who's to say if they are
| illiterate or just have a different view of value and risk?
| steveBK123 wrote:
| Yes it does.
|
| Just because someone does inevitably win the lottery does
| not make lottery ticket buying financially literate &
| savvy.
| BaseballPhysics wrote:
| It's ironic that you make that comparison, as a lot of
| very very financially literate people buy lottery tickets
| because _they know they 're taking a risk_, they _know
| the probabilities_ , and they still do it _because it 's
| fun_.
|
| For the same reason, some of the most brilliant minds out
| there gamble on games of chance, or engage in sports
| betting, or other high risk activities.
|
| Just because someone takes a risk that you would not
| take, doesn't mean they're financially illiterate, and
| certainly you are not in a place to judge one way or the
| other.
|
| Edit: And as an aside, I can speak to this with some
| personal experience, as on a lark I threw a bit of money
| at GME back in the day. Not a lot! Certainly no more than
| I could afford to lose (and I assumed going in that I
| would lose it). It was a rollicking good time as I
| followed the hype cycle on Reddit and whatnot. And in the
| end I 5x'd my bet.
|
| I don't for a second believe that was anything but dumb
| luck. And you won't find me running around finding new
| meme stocks to chuck money at. But I certainly enjoyed
| myself!
|
| So does that make me financially illiterate?
| dragontamer wrote:
| No. It makes you a gambler.
|
| And gamblers don't usually make money, because they're in
| it for entertainment rather than making money, saving
| money, or providing for their families.
|
| Believe it or not, investing is an activity that, under
| the correct circumstances, leads to the benefit of the
| investor, the company, and the economy in general. I
| personally seek this behavior that's beneficial to
| society in general (and its non-zero sum: I trade
| liquidity that I have today for the promise of modest
| future gains). Like 5%/year (aka, the current FFR / risk
| free rate) to 15%/year on the riskier bets on good years.
|
| People looking for returns much larger than 5% to
| 15%/year today are gambling. That's just not the speed at
| which companies grow, so you're betting that other people
| have undervalued a company, or you're betting on a
| "Greater fool" swooping in to rescue you. You're not
| betting on the underlying mechanisms that lead to
| economic growth.
| [deleted]
| BaseballPhysics wrote:
| > Believe it or not, investing is an activity that, under
| the correct circumstances, leads to the benefit of the
| investor, the company, and the economy in general. I
| personally seek this behavior that's beneficial to
| society in general
|
| That sounds very noble.
|
| Of course, the reality is the vast majority of people
| trading financial instruments do it for one reason: to
| enrich themselves (or, in this case, to entertain
| themselves). Everything else is a side effect as a
| consequence of regulations creating incentives that lead
| to socially constructive outcomes.
|
| > so you're betting that other people have undervalued a
| company
|
| That's... kinda the entire point of active trading.
|
| I personally don't believe it. In general I'm an
| efficient markets guy. But there are a lot of active
| investors, including mutual funds, hedge funds, etc, that
| operate exactly on this principle.
| dragontamer wrote:
| > to enrich themselves
|
| Yes. Because the underlying 5% to 15% gains due to
| general economic growth is one of the most reliable ways
| at building wealth in this country. It provides a service
| to companies who need money today for their expansion
| (through the IPO and secondary-offerings mechanisms). It
| provides steady, long-term growth to investors looking
| for a place to park their money.
|
| Its not only good for the country, it is also a
| relatively reliable way to grow money for everyone.
|
| Betting beyond this is unreasonable, and unlikely to make
| yourself any money. The $700,000,000+ sunk into BBBY this
| past 6 months is proof of that. (600-million shares at a
| bit over $1 per share, as BBBY's board of directors
| printed 600-million new shares to profit over the Ape's
| stupidity / gambling behavior). Throwing good money at a
| company that failed to make its bond payments in Dec
| 2022, while the Board of Directors is printing stock like
| no tomorrow is... well... its pretty bad.
|
| -------------
|
| Look, if you're going to pretend that you were gambling
| on good odds or pretending to enrich yourself... at least
| choose a stock that wasn't so obviously eating the Apes
| alive for months. We literally can measure the amount of
| money that they lost by multiplying the secondary-
| offering prices with the number of shares printed.
| criddell wrote:
| > It provides a service to companies who need money today
| for their expansion (through the IPO and secondary-
| offerings mechanisms)
|
| I get that issuing stock is a way for companies to raise
| capital, but once it's out there, how does a company
| benefit when I buy 100 of their shares from you? Is it
| different than the used record or book market?
| dragontamer wrote:
| Each time someone buys a stock, the stock value rises
| (meaning the next secondary offering will be able to
| achieve more money raised with less shares issued).
|
| The stock value rises because you didn't buy 100 shares
| from me per se. You bought the 100-cheapest shares on the
| market, which naturally raises the price.
|
| ----------
|
| Lets say the market depth looks like the following:
|
| * 5 shares available at $95.20
|
| * 15 shares available at $95.21
|
| * 30 shares available at $95.22
|
| * 40 shares available at $95.23
|
| * 80 shares available at $95.24
|
| By buying 100 shares, you'll have wiped out the order
| book from $95.20, $95.21, $95.22, $95.23, and part of
| $95.24. The order book looks like the following now:
|
| * 60 shares available at $95.24
|
| This means your purchase has caused the stock to rise in
| value by 4 cents in this convoluted example.
|
| ----------
|
| Later, when the company sells 100,000 shares in a
| secondary offering, they'll be able to do it at a price
| ~4-cents higher than before. Thanks to your purchase.
| Similarly, each time they put for shares for sale, it
| adds to the order book / market depth as sales.
|
| IE: The company can't just sell all 100,000 shares at
| $95.24. No one is buying $95.24 "right now", so the
| shares simply won't move.
|
| To have a chance of selling, the company needs to lower
| the price, and offer the 100,000 shares at $95.23 cents.
| Someone's probably buying at that point, but it won't be
| for 100,000 shares. Etc. etc. The company continues to
| search for the price where the market is willing to buy
| its shares.
|
| But whenever it decides to do this process, that company
| is at 4-cents higher thanks to your 100-share purchase.
|
| ---------
|
| Of course, all this theory goes to absolute crap when a
| company with 117-million shares (like BBBY in December
| 2022) decides to just hype up the apes and sell them
| 600-million new shares that didn't exist before. Of
| course the prices would collapse, that kind of
| environment makes it impossible for prices to go up at
| all.
|
| There is also a serious moral question here: was it moral
| and correct for BBBY to sell these 600-million new
| shares? (And if it was immoral, did they break a law when
| doing so?). Remember: the board of directors is supposed
| to represent the will of the shareholders. Was it really
| the shareholder's desire to be diluted by a 1-to-6 ratio?
| rchaud wrote:
| > who's to say if they are illiterate or just have a
| different view of value and risk?
|
| When their opinions come exclusively from an echo chamber,
| there's effectively no difference. Visit r/BBBY and you'll
| find plenty who are ready to hold the stock all the way
| through BK.
| jandrese wrote:
| Just because a risky behavior works out sometimes doesn't
| make it any less risky.
| BaseballPhysics wrote:
| I never said it wasn't risky.
|
| I'm saying it's unfair to assume it's proof someone is
| "financially illiterate", i.e. uneducated or stupid.
|
| Educated people can have different assessments of risk.
| dragontamer wrote:
| BBBY was publicly in default in December 2022 (and this
| was announced to the world in January 2023), and their
| plan to get out of it was to print hundreds-of-millions
| of shares and sell it to the APES to raise money a-la
| AMC.
|
| As much as the APEs want to compare this even to Hertz...
| Hertz wasn't printing hundreds-of-millions of shares in
| its troubled time in 2020. (They tried to, but unlike
| today, a judge shut that attempt down).
|
| ----------
|
| So on the question of "what if the apes just pump the
| stock up and everyone makes money?". The "financially
| literate" counter to that question is rather simple: how
| can the stock price go up if the board of directors is
| printing 600,000,000 new shares? (Note: BBBY only had
| 117-million shares in December).
|
| If the stock price fails to go up, why would the apes
| keep investing? If the apes fail to invest, how does BBBY
| get out of its default with JP Morgan/Chase? And here we
| are today, with the formal bankruptcy being filed. It was
| an attempt (IMO, an immoral attempt) to get money, but it
| did raise ~$700 million from the apes. But that's not
| enough to rescue BBBY.
|
| ---------
|
| Now this is where Hertz did well by the way, after the
| bankruptcy. If you really want to gamble "like people did
| with Hertz", today is the day, post-bankruptcy filing,
| that you start sinking your money into this stock. I
| don't recommend it though.
| itsoktocry wrote:
| > _I 'm saying it's unfair to assume it's proof someone
| is "financially illiterate", i.e. uneducated or stupid._
|
| Assume, sure. But you could follow along on Twitter or
| StockTwits and see _why_ many of these people were buying
| Hertz. That 's the beauty of modern times. I certainly
| didn't see many doing risk analysis, it was mostly "Burn
| the shorts!".
|
| And, many people bought all the way down from $20 to get
| an $8 payout.
| [deleted]
| [deleted]
| dragontamer wrote:
| You can be right for the wrong reasons. You can be wrong
| for the right reasons. You can be right for the right
| reasons, you can be wrong for the wrong reasons.
|
| The problem with being "right for the wrong reasons", is
| that your logic fails to apply to future situations.
|
| The "wrong reasons" in this case, is the obvious ego-
| tickling / ha ha the other people were wrong that's
| obviously intrinsic to the gambling / meme stonk trading
| culture. I'm sure it feels good when you're right for the
| wrong reasons, but I don't think it leads to long term
| success. ("Royal You", not you in particular, if you don't
| mind).
|
| But yes, it does feel good to be a contrarian and win due
| to dumb luck. But I'm not sure how many times "Hertz"
| situations will pop up in the future. I think this ego-
| tickling / contrarian mindset is at the root of this
| behavior, at least based on the discussions I have in my
| social circle / meme stock traders I'm aware of.
|
| -----------
|
| There's also "wrong for the right reasons", which is my
| preference in general. You generally want to be wrong
| today, if it means that your logic holds for most future
| cases.
| jraby3 wrote:
| A simpler way to say this is you can have a correct bet
| and a bad outcome and an incorrect bet and a good
| outcome.
|
| If I were to offer you $1 for heads and $3 for tails and
| you chose heads and lost, I'd win the bet but it's still
| a bad bet.
| lcnPylGDnU4H9OF wrote:
| Sounds like I was wrong for the wrong reasons too. (I
| lose the bet _and_ it was a bad bet.)
| morkalork wrote:
| Bed Bath and Beyond the Pale
| beiller wrote:
| Bed Bloodbath and Beyond
| myhf wrote:
| Bye Bye, Baby
| fknorangesite wrote:
| This the new Doom DLC?
| dilyevsky wrote:
| I think you're wrongly assuming that the point of meme stock
| "investing" is to make money - quite the opposite actually
| adam_arthur wrote:
| They didn't sell nearly enough shares.
|
| They could have probably saved their business, at least in the
| short term, by selling more. Their shares outstanding barely
| increased even as the price rocketed unjustifiably higher on
| meme energy. I'm consistently amazed by the poor management by
| CFOs of companies not selling shares when their P/E or even P/S
| multiples are 100x+.
|
| This is 100% free and exploitable money available to
| businesses, that quite clearly won't last into perpetuity. NVDA
| should be selling 10%+ of their share count into the market at
| this price. You can buyback the shares later when the price
| will, inevitably, and quite obviously materially fall. You
| could immediately put the money into a MMF yielding 5% rather
| than the current 1% earnings yield. There's just obvious, no
| brainer stuff here for many CFOs to take advantage of.
|
| Looks like BBBY share count has declined materially over the
| past decade, which was quite surprising. Goes to show that
| buybacks mean nothing for shareholder returns until you sell.
| And the buyback itself is a disposal of cash on hand (or
| accrual of debt), so is price-neutral in the immediate term.
| Who wants to bet that BBBY would rather have the cash right
| about now?
|
| https://www.macrotrends.net/stocks/charts/BBBY/bed-bath-beyo...
| FormerBandmate wrote:
| It takes a lot of time to authorize share sales. When you do
| that it tanks the stock. AMC tried to at $80 and got voted
| down so had to go through several hoops which caused massive
| declines.
|
| Elon Musk is one of the only people who's ever made it work,
| and his sales of Tesla stock are largely responsible for its
| current success
| adam_arthur wrote:
| You can authorize future share sales well ahead so that
| you're already prepared. Many companies have consistent
| authorization to sell into the market when they feel timing
| is right. It's a common way that BDCs and REITs grow. If
| the stock is trading well above NAV, selling shares is
| accretive to shareholders. Buybacks above NAV/fair value
| are dilutive (which clearly was the case with BBBY)
|
| You can also sell in blocks to private acquirers if anybody
| bites. But the first approach is better if it's a meme
| situation (no rational buyer would take a block of shares
| close to market). Clearly there are many companies that
| could have and likely still can sell large blocks of shares
| close to market, NVDA being one example.
|
| "A shelf offering allows a company to register its
| securities with the SEC but then delay putting them on the
| market for a period of up to three years. This provides
| some advantages, as the company can time the release of its
| securities, ideally aligning the issuance with favorable
| market conditions. Shelf offerings can also help companies
| save on the registration process, as they do not have to
| re-register each time that they release new shares."
|
| from Investopedia
|
| Somehow people confused this all along the way and simply
| equated "buybacks = good". Its about what value you get for
| the shares you're buying/selling. That's it. Buying back
| your shares at a 30x+ earnings multiple is going to be a
| terrible allocation of capital for most companies in the
| long run
| lbwtaylor wrote:
| > They didn't sell nearly enough shares.
|
| This doesn't seem to be right. From Matt Levine:
|
| >On Jan. 20, Bed Bath & Beyond Inc. had about 117.3 million
| shares of common stock outstanding; the stock closed that day
| at $3.35 per share. On March 27, it had about 428.1 million
| shares outstanding, at $0.7881 each. On April 10, it had
| 558.7 million shares outstanding, at $0.2961 each. Yesterday,
| April 23, when it filed for bankruptcy, it had 739,056,836
| shares outstanding. 1 The stock closed at $0.2935 on Friday.
|
| https://archive.is/PXnpB
|
| Seems like they sold as much as possible, enough to crater
| the stock, but not save the company.
| adam_arthur wrote:
| Yes, they waited until the share price was close to 0 to
| start selling rather than when it spiked to 20. Note the
| dates in what you quoted versus their stock chart.
|
| If they had actually sold earlier when the stock was
| largely mispriced to the upside, they may have been able to
| turn it around. Good capital management is raising money
| when you dont need it in preparation for time that you
| do... not panic selling as your stock is already on the
| verge of bankruptcy.
|
| My commentary was exactly that. That companies should raise
| when their stock is fundamentally overvalued. There are
| hundreds of companies out there that sure wished they had
| raised in 2021. Many of them are likely to follow in BBBY's
| footsteps
|
| Really poor execution by CFOs across the board. I think a
| combination of being overly optimistic, plus personal
| incentives against lowering the share price in the short
| term (Stock based comp, board may be short term oriented
| and decide to fire you, etc).
| graeme wrote:
| Companies will not find unlimited liquidity at given
| share prices.
| paulpauper wrote:
| _Bed Bath continued to sell hundreds of millions of shares
| while they were preparing for bankruptcy and retail investors
| (or meme stock investors) continued to buy them._
|
| That is how markets work. Buyer must match seller. Meme stock
| investors are only a small % of buyers. Others are funds.
| Sniffnoy wrote:
| > As usual Matt Levine's take on this is a good read.
|
| Link?
| polygamous_bat wrote:
| He regularly writes a column on Bloomberg called Money Stuff,
| you can see a few examples of him talking about BBBY here:
|
| https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe.
| ..
| Sniffnoy wrote:
| Sure, but I was hoping that the commenter above would link
| the particular piece they had in mind rather than just
| referring to it.
| marksmith2996 wrote:
| The confusing thing is that they waited until the stock was
| under a dollar to do an offering. Had they done at $20 just
| like 6 months ago they probably could have paid their debts.
| neurobama wrote:
| The whole stock market in 2023 makes no sense to me, not just
| Bed Bath and Beyond. So many companies no longer pay dividends.
| So many classes of stock are now non-voting shares. Common
| stock shareholders usually get nothing if a company goes
| bankrupt and liquidates.
|
| So if I don't get dividends, can't vote, and am not entitled to
| a share of the company's assets, what is the actual value in
| owning stock? Do I just wait for the share price to go up, sell
| at the peak, and pass my shares on to the greater fool? That's
| starting to smell a lot like the worst sort of crypto trading.
| nemo44x wrote:
| > Common stock shareholders usually get nothing if a company
| goes bankrupt and liquidates.
|
| That's that whole risk and reward thing. Equity is often the
| last in line for anything when a company is in trouble. You
| need to pay employees, vendors, bond holders, other loans,
| etc first. Pretty much everyone before a share holder sees a
| dime.
|
| > what is the actual value in owning stock?
|
| They _could_ pay dividends one day but dividends have fallen
| out of fashion because the taxes on them aren 't good. So
| many share holders don't want dividends but rather for
| companies to buy back shares, making their shares more
| valuable.
|
| > Do I just wait for the share price to go up, sell at the
| peak, and pass my shares on to the greater fool?
|
| If you can do that reliably then you will be the richest
| person on Earth. There are many great companies worth
| investing in.
| blakesley wrote:
| > So many companies no longer pay dividends. So many classes
| of stock are now non-voting shares.
|
| This seems normal to me. (I'm in my late 30s) Dividends
| aside, you're saying you used to do a lot of voting and now,
| in 2023, you're not anymore?
| NoboruWataya wrote:
| Others have mentioned buybacks, but the broader point is that
| if a company is consistently profitable, it will _eventually_
| pay dividends (or do buybacks). The board, who decide what to
| do with the company 's money, have fiduciary obligations to
| the shareholders. They can hold cash reserves to cover future
| liabilities and they can re-invest profits in growing the
| business, but ultimately when the board cannot identify
| profitable investment opportunities, that money has to go
| back to the shareholders.
|
| Also, it is only in insolvent liquidations that shareholder
| get nothing back. If the company were to wind up while still
| solvent, the shareholders would get their share of its net
| assets. (Though I don't think this happens much with public
| companies.)
| Sohcahtoa82 wrote:
| > If the company were to wind up while still solvent,
|
| Has this _ever_ happened to a publicly traded company?
| vkou wrote:
| Yahoo, essentially, when it disgorged its stake in
| AliBaba to Yahoo's shareholders.
| dragonwriter wrote:
| > So if I don't get dividends, can't vote, and am not
| entitled to a share of the company's assets
|
| As a stockholder, you are entitled to a share of the
| remaining assets after debts are paid at dissolution.
|
| Of course, the nature of _bankruptcy_ liquidation is that
| there tend not to be remaining assets.
| Etheryte wrote:
| Stockholders are not supposed to get anything if the company
| they're holding goes to zero, that's not a bug, that's
| literally how stocks work.
| mahogany wrote:
| This reply (and several others) is focusing on one part of
| the comment and ignoring the overall point.
|
| The question is: if companies are no longer giving
| dividends, no longer giving voting rights, _and_ you get
| nothing if it goes to zero, then what, intrinsically, is
| the value of a stock tied to? Is it something other than
| "stock will go up so someone will buy it at a higher
| price"? How does it differ from, say, Bitcoin?
| spaceman_2020 wrote:
| Everything has been fundamentally detached from reality, from
| stocks to housing.
|
| Houses can sit empty without tenants for years but they'll
| only go up. Companies can be unprofitable for literal decades
| but they'll keep finding funding and buyers. Commercial
| properties can bleed tenant but the prices will only be up.
|
| In a world of shrinking growth , stalling productivity, and
| dying demographics, the market behaves like infinite growth
| is baked in.
|
| It's very clear to any observer that the markets don't follow
| any rationality anymore.
| cuteboy19 wrote:
| A zero interest rate phenomenon
| rvba wrote:
| Markets dont follow logic because central banks pump
| incredible amounts of dollars via money creation.
|
| Quantitative easing, 0% interest, massive inflation - are
| all just facets of the same problem - that central banks
| dont work for the common people.
|
| Market looks irrational, but it is rational - money is
| "free" - so zombie companies can exist. Inflation just
| ruins the low and middle class, but who cares - it is
| convenient for governments.
|
| Market was artificially pumped by quantitive easing. Also
| money is not free for normal people, banks earn interest
| and that interest comes back as inflafion.
|
| Licence to create money out of thin air is like license to
| steal.
| kristianbrigman wrote:
| This is because money is trying to be two things at once
| - a medium of exchange, and a stable asset - and those
| are often in conflict.
|
| If I just want to trade my bushel of corn for your
| chicken, money makes it easier - I exchange my corn for
| some money, and then I exchange that money for your
| chicken. I don't care whether the money is 'one fricasee'
| or 'ten million gorzebos' as long as we both agree that's
| the number attached to it. You can use something that is
| a real asset for this, but it actually doesn't have to
| have any intrinsic value to be usable for this, as long
| as everyone agrees to use it.
|
| However, there's a time element - I can sell my corn, and
| then keep the money for a while, retaining the power to
| buy the chicken later. That turns it into a potential
| asset. During that time, the numbers attached to
| different items could go up or down - the time element
| makes arbitrage possible. Even for 'useless' assets.
|
| Too much money held as assets can reduce its
| effectiveness as a medium of exchange - but improving the
| effectiveness as a medium of exchange can reduce its
| stability/value as an asset.
|
| Also probably why there is a lot of contention over gold
| standards etc. - the gold standard improves its value as
| an asset, while potentially limiting its value as a
| medium of exchange - so it's going to depend on which one
| you prioritize whether you will favor it or not.
| paulddraper wrote:
| > Licence to create money out of thin air is like license
| to steal.
|
| Is the purchasing power of your savings account shrinking
| 6% a year from inflation, or it is shrinking 6% a year
| from bank robbers?
|
| Same effect either way.
| vkou wrote:
| If I'm sitting on a mountain of corn/a pile of gold/a
| warehouse full of NVIDIA GTX 3080 cards, and someone else
| starts growing corn/digging up gold/selling 4080 cards,
| my savings' purchasing power is going to drop, but it
| would be disingenuous of me to complain that I'm being
| robbed.
| fumar wrote:
| Does this mark an end for our society's principles? Are we
| do for a dark age? Are we in it or will there be an
| enlightenment or renaissance?
| spaceman_2020 wrote:
| I don't know, but it's increasingly frustrating as an
| average person. Apartments around me keep appreciating in
| value every year, rents keep going up astronomically even
| when the houses stay empty.
|
| My income went up, but housing in my area went up nearly
| 2x. I'm being priced out of areas I've lived in forever.
|
| I feel like a social contract has been violated.
| Everything, from products to housing seems to be targeted
| at the "luxury" and "premium" segment. It's like a
| omnipresent giant middle finger to anyone but the
| wealthy.
| crooked-v wrote:
| Housing prices keep going up in the US because,
| fundamentally, there's not enough housing and hasn't been
| enough housing built for decades [1]. In most big cities,
| this is a self-inflicted problem caused by bad zoning and
| by planning and permitting processes that can take years
| and add huge amounts to home prices. (This is a big part
| of the reason there's so much "luxury" housing; adding a
| superficial high-end gloss is one of the few ways to
| disguise the additional bureaucratic markup.)
|
| Unfortunately, a huge number of people like to blame this
| entirely on evil developers and evil corporations and
| think that merely adding more regulation on those will
| make the problem magically go away.
|
| [1]: https://www.cnn.com/2023/03/08/homes/housing-
| shortage/index....
| [deleted]
| bink wrote:
| Housing prices are rising dramatically even where
| populations are declining and land is abundant. It's not
| as simple as saying there's a housing shortage due to
| zoning.
| kevinventullo wrote:
| Are you sure? Housing prices in my small Midwest hometown
| have risen by something like 1%/yr on average for the
| last 30 years.
| bumby wrote:
| Just curious, what's the population growth been like? If
| it's been declining, why would we expect housing prices
| to go up at all?
| thfuran wrote:
| If it used to be that two or three generations of a
| family lived in a house and now everyone wants their own,
| housing demand could increase while population drops. If
| marriage rates or number of children per household
| decrease, housing demand per capita probably increases.
| traverseda wrote:
| General inflation?
| twelve40 wrote:
| it's almost never a simple function of population. One
| example: between 2010 and 2020 population of Latvia
| dropped by about 10% while the house prices have doubled.
| jimbob45 wrote:
| I wish this narrative would die. It's probably true that
| there's not enough housing but it's also true that AirBNB
| is sucking up many of the vacancies and apartment
| ownership consolidation is allowing owners to endure
| vacancies longer than they should be able to. You're
| simply never going to convince everyone that building
| more is the answer when there's such low-hanging fruit in
| front of everyone's eyes that you refuse to acknowledge.
| midwesternerer wrote:
| I don't understand why you are suggesting Airbnb isn't
| "fair" demand on the housing stock.
|
| Also it is really hard to believe that Airbnb is a
| meaningful impact on housing prices outside of certain
| touristy locales. My suburban neighborhood has had 5+
| offers on every house that has come for sale in the last
| year and there are no Airbnbs in the neighborhood and
| only two within a five mile radius.
|
| The only real answer is to build more--not depend on the
| government to artificially constrict supply by regulating
| vacation rentals.
| bumby wrote:
| > _The only real answer is to build more_
|
| I don't think this kind of dichotomous thinking generally
| holds with complicated real-world problems. They are
| almost always a confluence of multiple "answers".
|
| E.g., yes, housing supply is probably part of the
| solution. But so may be integrating policies that
| disincentivize viewing something necessary (like housing)
| as an investment asset.
| midwesternerer wrote:
| I'm not sure what you are arguing with here. Housing is
| an attractive investment because the supply is
| constrained which drives up the price.
| bumby wrote:
| I'm not 'arguing', I'm trying to add some nuance.
|
| I'm saying housing is a unique form of 'investment' for a
| variety of reasons. For one, it's an 'investment' that
| most people can't exit from because you have to live
| somewhere. It's also an investment that is relatively
| illiquid. It's also an investment where the majority of
| Americans wealth (about 70%, I believe) is tied up in,
| from which they borrow against. It's also a necessity.
|
| These all combine to create an incentive for a bunch of
| wonky policies that can have negative societal
| consequences, like artificially inflating the price of
| housing. So, yes, the fact that it is considered a good
| financial investment is also part of the reason it
| creates societal problems.
|
| It would be like artificially constraining the production
| of food so that those who have 'investments' in food
| companies can make more profit. Obviously good for the
| investors, probably less so with society as a whole. Now
| add a bunch of constraints like the friction of
| buying/selling those assets etc. and the problem gets
| worse.
| pjmorris wrote:
| I just went and looked up 'San Francisco empty
| residences'... it's somewhere between 40,000 and 60,000
| depending on where you look. I then looked up 'San
| Francisco homeless population'... somewhere around 8,000.
|
| I am not convinced of the narrative that there isn't
| enough housing.
| rilindo wrote:
| Those 40,000 - 60,000 "residences" are not necessarily
| available or even occupy-able. And the number of homeless
| is very like an under-estimate[0].
|
| [0]https://www.youtube.com/watch?v=3xZXdXxYBGU
| nprateem wrote:
| House prices go up because they're now investments. Bring
| in land value tax and you'll quickly see a reversal.
| contingencies wrote:
| You have pretty much articulated the feeling of anyone
| under 50 in Australia.
| OoOOo wrote:
| Absolutely agree with this assessment.
| akiselev wrote:
| If anyone honestly feels this way, I invite them to read
| _The Republic for Which It Stands_ [1] by Richard White
| which is about the post-Civil War era and the Gilded Age.
| Everything from the political division to the growing
| income inequality looked a lot like today - worse even! -
| and the author specifically points out the similarities
| throughout the book.
|
| This has all happened before, and it will all happen
| again.
|
| [1] https://www.amazon.com/Republic-Which-Stands-
| Reconstruction-...
| etothepii wrote:
| So say we all!
| Xeoncross wrote:
| The market is acting very rationally. If you print
| trillions of dollars out of thin air every year, there is
| more money and more demand. So everything else goes up in
| price.
|
| Everything still costs the same relative to the amount of
| US dollars that exist. Wages just aren't keeping up with
| printing press.
| bryanlarsen wrote:
| Money printing (aka QE) stopped 13 months ago and money
| shredding (aka QT) started 10 months ago.
| Xeoncross wrote:
| Check the charts again, the new lending vehicles to banks
| just wiped out half the QT that we had gained last year.
|
| Set the chart to a 1yr scale:
| https://fred.stlouisfed.org/series/WALCL
|
| You'll see our QT was already paltry to begin with
| compared with the total balance sheet, now we're close to
| our ATH again.
|
| Prices are the result of years of strong printing (since
| 2008) ballooning our cash vs asset ratio compared with
| what it was in the 90's or 00's. It takes time for the
| economy to react, but we certainly had a bull run decade
| since the printing started.
|
| In 2018 they started the same slow sell off of assets,
| but then quickly surpassed it during the 2020 lockdown
| printing.
| FredPret wrote:
| > don't follow any rationality anymore
|
| Anymore? When have markets ever been rational? Markets only
| line up with reality over the long term. You can point to
| any instant, and even any decade in time, and point major
| inaccuracies in the public's collective financial thinking.
|
| > Houses can sit empty without tenants for years but
| they'll only go up.
|
| Do you have stats for how much of a problem this is? The
| problem seems to be vacancy rates that are too low, not too
| high.
|
| > Companies can be unprofitable for literal decades but
| they'll keep finding funding and buyers.
|
| This was a ZIRP (zero-interest rate policy) phenomenon and
| even then, was very limited in scope. Uber raised billions
| on a dumb business plan, yes, but that investment is tiny
| compared to the total amount invested in that period.
|
| > In a world of shrinking growth , stalling productivity,
| and dying demographics,
|
| Opinions should be based on facts, not over-excitement.
| Growth has been booming in real terms for centuries now.
| Many countries are in demographic decline, but overall we
| still have lots of net population growth for a long time.
| Productivity is not stalling, and is in fact skyrocketing
| all over the world.
|
| https://ourworldindata.org/grapher/labor-productivity-per-
| ho...
|
| > the market behaves like infinite growth is baked in.
|
| Lots of people blindly pump their money into index funds
| every month. While this raises PE ratios to near-historic
| highs (not all-time highs mind you) it is by no means
| "infinite".
|
| I find lots of great businesses with stock that sells for
| far more reasonable prices, given that they are off of the
| major indices.
|
| Blind doomsterism doesn't help anyone.
| wintogreen74 wrote:
| >> You can point to any instant, and even any decade in
| time, and point major inaccuracies in the public's
| collective financial thinking.
|
| Examples: today Halliburton and GE Health both posted
| numbers that be the market and saw big drops in value,
| while Spotify missed big time and swung to a loss, yet
| saw their stock price go up. Everybody points to
| potential but totally dismisses today's reality.
| spaceman_2020 wrote:
| Cities have had to literally charge a tax to penalize
| investors who let their houses stay vacant. You think
| this would be happening if vacant investor homes was not
| a problem? [0]
|
| > Many countries are in demographic decline, but overall
| we still have lots of net population growth for a long
| time.
|
| Incredible strawman. Population has been growing in
| Africa and a handful of developing countries. That should
| have no bearing on valuations in western markets - these
| population growth centers are neither producers nor
| consumers of western capital goods/services.
|
| > Productivity is not stalling, and is in fact
| skyrocketing all over the world.
|
| In your own chart, labor productivty has been growing at
| a much slower pace since 2010 compared to the previous
| decades. This can be corroborated by other studies as
| well that show much more sluggish productivity growth in
| the last 20 years compared to the years before it.
|
| This is a frustrating comment, filled with hand wavy
| platitudes about growth for centuries and booming
| population growth. It completely ignores the temporal
| component of market valuations.
|
| 0: https://vancouver.ca/home-property-development/empty-
| homes-t...
| cycomanic wrote:
| > > Houses can sit empty without tenants for years but
| they'll only go up.
|
| > Do you have stats for how much of a problem this is?
| The problem seems to be vacancy rates that are too low,
| not too high.
|
| No stats on my part, but I have some anecdotal evidence
| from Australia a couple of years ago. I definitely knew
| of several apartment complexes which were significantly
| empty, but advertised rents did not go down. The
| reasoning behind this was that banks used the previous
| rent for assessing value (which people used as capital
| for buying the next property). Because everyone
| essentially invested based on property price increases
| not rental income, it made more sense to leave the
| apartment empty and use the higher capital (based on a
| previous evaluation) to use for buying the next
| apartment, than to renting it out and not being able to
| buy the next property. L
| sharkweek wrote:
| I live in Seattle. There was a house on my street that had
| been torn down in maybe 2013-2014, that the owner of the
| lot sat on for a bit (it was one guy). He spent the next
| five-ish years slowly building a big, new house.
|
| I'd laugh at how long it was taking him on a week-by-week
| basis while taking my dog on a walk. There it is, the house
| that will take almost half a decade to complete.
|
| Well he finally does, and he sells the thing for close to
| two million dollars.
|
| I then go look at comps during the same time period.
|
| Because of his snail's pace, he ended up probably making an
| additional 600-700k (or about 100k+ per year) because of
| how long it took him to build.
|
| Jokes on me I guess!
| [deleted]
| [deleted]
| rcme wrote:
| Is the market acting like infinite growth is baked in, or
| is inflation simply out of control? And I'm not talking
| about CPI over the last three years. Stocks have been
| insane over the last decade. Real estate has been insane
| over the last decade. Neither of which is measured by CPI.
| So yea... the market is pricing things like the Fed will
| keep printing money to prop up assets it explicitly ignores
| in its inflation calculation.
| DSingularity wrote:
| It certainly feels like money is going to lose its value
| eventually. Everyone is becoming wealthy by just clicking
| buy. When people start using that money, what will
| happen? Markups from exceed demand -- inflation.
| XorNot wrote:
| Inflation of what though? Real estate is the only asset
| on the planet we can't just manufacture more of. iPhones,
| cars, clothes...all of that is disposable and near
| infinitely reproducible.
|
| A person can't eat more then a very limited amount of
| food per day, regardless of their wealth.
|
| So what's going to inflate?
| bun_at_work wrote:
| The market kinda does have infinite growth baked in. To
| oversimplify more than a bit: The petrodollar system kind
| of ensures we export dollars to all countries who need to
| buy energy on the global market (not all, but a lot).
| That means the monetary supply has to go up or energy
| prices will skyrocket. So dollars are printed and the fed
| + treasury target a growth rate of 2%. Obv things are
| messed up right now, but that is how the system is
| designed. Infinite growth at 2% inflation per year.
|
| E: To be clear I'm not claiming this is sustainable, only
| how the system is designed.
| BeFlatXIII wrote:
| Real estate and stocks are both inflated from the 2008
| money printing. Why didn't the QE from the '08 crisis
| cause visible CPI inflation? The money went directly to
| billionaires and banks who bid up prices on assets that
| banks and billionaires enjoy: stocks, yachts, and real
| estate. The C-19 stimulus money went to the pockets of
| ordinary citizens, who then increased demand for products
| regular people spend money on, causing inflation readily
| captured by CPI.
| nemothekid wrote:
| > _Is the market acting like infinite growth is baked
| in,_
|
| It's this. America has decided that:
|
| 1. The most important retirement/wealth vehicle is your
| home.
|
| 2. Home prices must only go up or your wealth will be
| destroyed.
|
| 3. The government should use it's power to uphold (1) and
| (2), which results in NIMBYism, all the tax breaks you
| see around mortgages, and of course the 2008 bailouts.
|
| w.r.t stocks I largely think that was a ZIRP phenomenon,
| but stocks are allowed to correct somewhat.
| bumby wrote:
| You forgot the part where people use their home equity as
| a revolving line of credit, which exacerbates #2.
| Eumenes wrote:
| Why would an empty house not go up in value? If anything,
| if its unused, it'll likely require less upkeep/repairs.
| bluedino wrote:
| Abandonded houses are often stripped of copper, etc and
| have squatters, vandals, problems from not being
| maintained or lived in...
| Eumenes wrote:
| Abandoned? You know people own two homes and live in them
| seasonally w/o them being vandalized? Source: have a
| summer cabin that's never been rack sacked by vandals.
| esafak wrote:
| ransacked. Dictionary says it's from Norse: rann (house)
| + soekja (seek).
| BearOso wrote:
| These are usually gated areas where it's mostly huge
| model homes and they since few live there, outsiders
| would be be obvious.
| yamtaddle wrote:
| Didn't look at a lot of long-term vacant properties
| during & after the '08 crisis, I take it?
|
| Modern houses aren't meant to survive in most climates,
| without heating _and air conditioning_. They grow mold
| from trapped humidity, and the finishes fall apart from
| expansion /contraction.
|
| And this is assuming they were properly winterized before
| being abandoned, and that they don't suffer any damage
| that allows outright water infiltration (say, wind damage
| or a tree branch falling and letting water in through the
| roof or siding) or vandalism.
|
| I've seen some that were starting to have serious
| problems less than a year after being abandoned.
| Thousands of dollars of damage already accrued.
|
| [EDIT] Now, keep the heating and AC running at minimal
| levels and have someone check in on it every few months,
| then fix any problems that are developing, and that's
| another matter--but that costs money, and isn't something
| I've ever seen done with long-term-vacant institution-
| owned properties.
| spaceman_2020 wrote:
| It simply means that housing is being bought up by people
| who don't need their investments to return any cash flow.
|
| Which is great if you're a wealthy oil tycoon from UAE or
| a Chinese billionaire. But not so great if you work in
| the city and want to buy a house for your family.
| 98codes wrote:
| If it's unused generally but also kept up, sure. That's
| generally not the case for empty houses.
| RC_ITR wrote:
| >So if I don't get dividends, can't vote, and am not entitled
| to a share of the company's assets, what is the actual value
| in owning stock? Do I just wait for the share price to go up,
| sell at the peak, and pass my shares on to the greater fool?
| That's starting to smell a lot like the worst sort of crypto
| trading.
|
| If they aren't paying dividends (but are profitable), then
| profits are either going to the balance sheet or into capital
| and you _literally_ own those things.
|
| It's also difficult to grasp, but share buybacks have the
| same net effect as dividends (they primarily exist for tax
| efficiency).
|
| Oracle is a great example here. They have cut their number of
| share _in half_ [0] over the past decade, while paying a
| relatively paltry 1.6% dividend yield. So sure, you 're not
| swimming in cash as an owner, but many investors don't want
| that, they'll gladly take the _effective doubling of their
| ownership of the balance sheet_ that they 've been given
| instead.
|
| [0]https://www.macrotrends.net/stocks/charts/ORCL/oracle/shar
| es....
| itake wrote:
| My understanding is buybacks are better than dividends for
| tax purposes, because with dividends you pay income tax and
| buy packs you pay capital gains.
| Wowfunhappy wrote:
| But the question remains, what exactly are you buying, and
| how is it tied to the actions of the company? This has long
| confused me as well with regard to non-voting shares.
| aketchum wrote:
| you are buying a piece of future cash flows from that
| company, discounted based on risk of realizing those cash
| flows
| burnished wrote:
| The context was non voting, no dividends shares. So where
| is the future cash flow? Genuinely also curious.
| boring_twenties wrote:
| With qualified dividends, you pay the LTCG rate anyway. The
| problem is that dividends are taxed twice: the corp pays
| corporate income tax on that money before it's distributed
| HDThoreaun wrote:
| Dividends pay the exact same tax rate as selling stock
| which is how you make money from buybacks. The difference
| is that buybacks allow you to take the income in the future
| and shift the tax burden timing.
|
| Both dividends and stock selling are normal income tax rate
| if you've held the stock for less than 6 months and capital
| gains rate if you've held for more.
| sbierwagen wrote:
| LTCG threshold is one year, not six months.
| nemo44x wrote:
| They aren't buying your shares back if you aren't selling
| them. The buyback makes each share worth more. You don't
| sell. You have something more valuable than before and
| now you can borrow money against it. That's the point.
| aketchum wrote:
| Are you sure about this? I believe you would prefer a
| share value increase of $1 instead of a dividend of $1,
| as you are taxed on dividends as income (income tax) but
| stock appreciation is capital gains (lower tax than
| income tax). This is in the context of American taxes.
| spokesbeing wrote:
| "Qualified dividends" are taxed the same as capital
| gains. To be qualified mostly depends on a minimum
| holding time, 60 days for common stock.
|
| https://en.m.wikipedia.org/wiki/Qualified_dividend
| RC_ITR wrote:
| You pay tax on the cash _now,_ you _choose_ when to pay
| tax on the share price increase.
|
| Money has time value.
| spokesbeing wrote:
| Of course but that's not what the parent comment is
| asking clarification on. Dividends are, generally, not
| taxed at income tax rate if you are buy and hold. They
| are taxed at CG rate.
|
| A bigger downside of dividends is that you can't offset
| qualified dividends income with capital losses (except up
| to the $3000 annual limit). And compounding is different
| because you pay tax only at the end rather than every
| year. But those are different issues.
|
| While I'm at there's the additional wrinkle that being
| able to actually get a significant LTCG rate difference
| by deferring the income really depends on structure of
| your future income and when in your lifetime you will
| sell.
| malfist wrote:
| Selling stock isn't entirely how you make money from
| buybacks.
|
| Buybacks inflate the stock price, making what you're
| holding more valuable, even if you don't sell. More
| valuable assets are useful for all sorts of things,
| including leveraging them for other activities, or
| selling them for capital gains.
| HDThoreaun wrote:
| Absolutely can get into all that, buybacks definitely are
| better for tax purposes, but saying "buybacks are taxed
| at capital gains rate and dividends are income tax rate"
| is not correct
| taeric wrote:
| For stocks that don't pay dividends, the only way you can
| make money from them is by selling.
|
| You are right that you can leverage them in all sorts of
| ways, but that isn't really what anyone means by making
| money. It is how you drown folks in leveraged debt that
| they can't pay back later, of course.
| autokad wrote:
| exactly. Most stocks are effectively over produced digital
| collectibles. a stock should only be worth the potential cash
| flows it gives you in the future. period.
|
| 'but I get a share of the assets if it goes bankrupt'. you
| mean nothing? share holders are last in line behind
| government, bond holders, other debt holders, preferred
| shares, and then maybe common stock.
|
| people are in some sort of 'rage' mode in gambling on assets.
| subsubzero wrote:
| agree, my thesis on 2023 was for stocks to start trending
| down, but for some reason there was this strange bump in the
| stock market and then when SVB collapsed I said yup its
| finally coming(a healthy correction). But the fed/treasury
| bailed out SVB's toxic assets(non-FDIC insured) to the
| detriment of the broader market. I feel like the fed will do
| anything to prevent even the slightest failure, but bad
| assets/institutions need to fail. Its analogous to not
| removing cancerous cells and letting them spread through the
| body.
| RecycledEle wrote:
| You are correct.
|
| If we ignore trades between investors, then people buy stock,
| receive dividends, and one day the company goes out of
| business. (Nothing lasts forever.) The dividends have to
| exceed the purchase price (accounting for an acceptable rate
| of return) to justify the purchase.
|
| Without dividends, stocks are a zero-sum game where someone
| has to lose a dollar for every dollar someone else gains.
|
| If a stock will never earn dividends, and the company will
| never buy it back, then it is worthless.
| ubermonkey wrote:
| The "non-voting shares" thing is just SUPER bananas to me.
| Like, you could hold a billion dollars of META shares and
| have no vote. In what sense is that "ownership?" Why do
| people go along with it?
|
| >So if I don't get dividends, can't vote, and am not entitled
| to a share of the company's assets, what is the actual value
| in owning stock?
|
| EXACTLY.
| crooked-v wrote:
| > Common stock shareholders usually get nothing if a company
| goes bankrupt and liquidates.
|
| ...what else would you expect to happen? If a company is
| bankrupt, it pretty much definitionally has zero value beyond
| whatever its assets sell for, and those will generally go to
| cover debtors.
| mech987987 wrote:
| When a company liquidates, bondholders are paid out before
| stockholders. This is to prevent moral hazard from companies
| going deep into debt and running off with the cash by
| liquidating the company.
| etothepii wrote:
| This is not always true and depends on the structure and
| terms of the bond. For example in the credit suisse
| takeover several classes of bond were wiped out while some
| classes of shares were not.
| HDThoreaun wrote:
| Companies that don't pay dividends generally do buybacks.
| Almost all public companies are profitable and do either
| dividends or buybacks.
| genghisjahn wrote:
| Common share holders almost always get nothing if a company
| goes bankrupt. That's part of the risk of holding stock. See
| the section How Assets are Distributed in a Liquidation:
| https://www.investopedia.com/ask/answers/09/corporate-
| liquid...
| wintogreen74 wrote:
| You can buy all the dirty, old fashioned stocks that still
| pay dividends like oil & gas, banking, integrated grocery,
| even Microsoft - at least until the activist investors push
| them to fundamentally change their business models.
| patrickthebold wrote:
| Random thought and I figure there must be a law against this:
| But what about the opposite, could a company sell off it's
| assets and do stock buy backs right until it goes bankrupt so
| that some investors get more $ ahead of the creditors?
| gamblor956 wrote:
| It's been tried occasionally a few times over the past
| century. Most attempts at sham bankruptcies have not
| succeeded, and the few that went through are still under
| litigation (see the Johnson and Johnson case from a few years
| ago).
|
| Bankruptcy law is administrative law, so courts are not
| limited to the letter of the law when assessing bankruptcy
| proposals; they are allowed to look at the _intent_ of the la
| as well.
| bombcar wrote:
| There are various tricks around this area (the Texas Two-step
| is a favorite) but most of the blatant ones have clawback
| possibilities.
|
| https://en.wikipedia.org/wiki/Texas_two-step_bankruptcy
| silisili wrote:
| I don't see how this isn't illegal, or more pointedly, why
| everyone isn't doing it if it is legal? So you can just
| write off liabilities into a new company? Why wouldn't
| every company do this every year?
| NoboruWataya wrote:
| In general, doing anything in anticipation of bankruptcy that
| would have the effect of preferring shareholders over
| creditors is illegal. The way that particular rule is
| described varies from jurisdiction to jurisdiction and there
| have been many attempts to get around it, but that is the
| general principle.
| criddell wrote:
| I've thought about that before.
|
| Would it be technically possible for a company to buy all of
| its shares back so that there are _no_ owners? The company
| would be self-owned.
| chimeracoder wrote:
| > Would it be technically possible for a company to buy all
| of its shares back so that there are no owners? The company
| would be self-owned.
|
| No, because there's a statutory minimum number of
| shareholders (which varies by country but is always greater
| than zero).
|
| But even if this weren't the case, it wouldn't be as weird
| as it sounds. In most states, nonprofits cannot issue
| stock, but they still exist as corporate entities.
|
| The directors ultimately control the company. Shareholders
| are secondary: irrelevant, except insofar as they can vote
| out the board of directors.
| d136o wrote:
| I wonder how much of it is explained by all the company
| retirement plans that are set to auto invest via an index fund.
|
| They says it's retail meme stock buyers... but what if it's
| everyone who doesn't have time to look at things and these
| publicly traded companies are now just selling into those
| reliable biweekly/monthly retirement account contributions.
| andylei wrote:
| BBBY is not in any major indices
| dna_polymerase wrote:
| Another relevant piece by Matt Levine is about Hertz, who were
| in a similar situation in 2020 iirc:
| https://www.bloomberg.com/news/newsletters/2021-05-12/money-...
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