On August 16, the stock price of Bed Bath & Beyond dropped from its trending price of $26 per share to approximately $20 in mere minutes. BBBY had seen around a 440% appreciation rate in around a month despite decreased revenue rates and increased debt. This spike was mostly fueled by traders on Reddit initiating a short squeeze on BBBY. Similar to what happened to Gamestop last year, if enough traders begin to pile into an already heavily shorted stock, short sellers are forced to buy back leading to mass appreciation.

But what exactly caused the stock price to collapse from $26 to $20? 

It turns out 20-year-old college student Jake Freeman had dumped a position worth 6% of BBBY’s market cap triggering the recent collapse. Jake had invested in 5 million shares of BBBY in late July after CEO Mark Tritton renounced his position after financial reports showed a 25% decrease in sales and revenue alongside the ever-growing pile of debt. Jake was able to acquire his shares for around $5.50 and became the second-largest non-institutional investor in BBBY. It is important to note that Jake’s buy-in came months after another prominent investor and venture capitalist, Ryan Cohen, founder of Chewy and chairman of Gamestop, bought a 10% stake in BBBY. Ryan was behind the infamous rally that triggered the Gamestop stock to skyrocket in a matter of days and with these factors in mind, BBBY was up 440% despite its diminishing returns and disappointing first-quarter performance. On Tuesday Jake decided to sell all 5 million of his shares crashing the prices in minutes. His sale also came at a fortunate time as, after his dump, Ryan Cohen’s venture capital firm made a statement that he would be selling his entire stake in BBY in the upcoming months sending the stock down an additional 15%. In the end, Jake walked away with around $110 million of profit in the span of a month and has set his eyes on another potential investment in a pharmaceutical company called Mind Medicine.

However, Jake’s recently acquired wealth has raised numerous suspicions and allegations of insider trading have also surfaced. While this case is currently not under investigation, Jake writes “I am truly going to miss being able to say I am the second-largest non-institutional shareholder of Bed Bath & Beyond, but I am certainly going to be shopping at BBBY tomorrow.”

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