A 20-year-old college student made $110 million by selling his stake in Bed Bath & Beyond as the company’s stock price rose over the summer. Jake Freeman’s big payout was made possible because he sold his Bed Bath & Beyond shares before billionaire investor Ryan Cohen exited the struggling home goods retailer following a stunning rally in the meme stock this month.
Freeman, who is studying applied mathematics and economics at the University of Southern California, bought 5 million shares in Bed Bath & Beyond at $5.50 a share in July. He spent a total of $25 million in the investment with the help of his wealthy uncle, reports the Daily Mail.
As a result of his investment, Freeman, 20, owned 6% of the American home goods retail chain company, which saw a surge in value thanks to the ‘meme stock’ boom. A meme stock is stock that gains popularity through social media.
On Tuesday, Freeman sold his stake in the company as the stock price rose to $27 a share. The Financial Times reviewed regulatory filings to report that the 20-year-old college student sold stock worth more than $130 million using his TD Ameritrade and Interactive Brokers accounts.
The stock fell 16% in after-hours trading Wednesday following reports that a big-name investor with a cult-like following may sell his stake in the struggling retailer. By Thursday, shares tumbled 35% as Ryan Cohen sold his stake in Bed Bath & Beyond.
“I certainly did not expect such a vicious rally upwards,” Freeman told The Financial Times on Wednesday. “I thought this was going to be a six-months-plus play…I was really shocked that it went up so fast.”
The company's shares were down at $12.27 in after-hours trading. After gaining nearly 360% this month, the share price had risen to $30 in the previous session when the rout began after RC Ventures said it aims to sell 9.45 million shares, worth $148.6 million.
"News that Ryan Cohen may be selling his stake in BBBY appears to have spooked the meme stock faithful," David Jones, strategist at Capital.com, was quoted as saying by Reuters.
(With inputs from Reuters and AP)
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