Bed Bath and Beyond stock analysis. BBBY stock.<br />Visit our Substack for more: https://www.overlookedalpha.com<br /><br />Bed Bath and Beyond is in bad shape right now and the stock has dropped to just 45 cents. <br /><br />The company files its annual report on April 26th so it has about 3 weeks to raise enough cash to avoid bankruptcy. <br /><br />But a deal with hedge fund Hudson Bay wasn’t enough and an attempt to raise $300 million dollars from selling shares didn’t work either. <br /><br />Right now, the best chance Bed Bath and Beyond has of surviving is if meme traders pile into the stock and give the company one last chance to raise capital. <br /><br />There’s not much sign of that happening as the stock keeps sinking towards zero. <br /><br />But is Bed Bath and Beyond stock a better bet than a lottery ticket?<br /><br />Let’s put the probability of Bed Bath and Beyond avoiding bankruptcy at 5% and let's say if that happens the stock goes to 5 bucks. <br /><br />Under that scenario you’d make a return of 1150% if you bought the shares at 45 cents which sounds like a great return.<br /><br />But we can calculate the expected value of that bet by multiplying the probability of it happening by the payoff. <br /><br />And the expected value of that bet is around 50 cents. That means for every $1 you invest in Bed Bath and Beyond you’d be expected to lose 50 cents on average. <br /><br />Meanwhile, the expected value of US powerball is 32 cents which means that for every $2 ticket you buy you can expect to lose 1.68 on average. And that works out to an expected value of 16 cents for every 1 dollar invested.<br /><br />So in that scenario Bed Bath and Beyond stock is a better bet than powerball.<br /><br />However, let’s say the chance of Bed Bath and Beyond avoiding bankruptcy is only 1%. In that scenario, the expected value drops to only 10 cents which means you’d be better off playing powerball than buying Bed Bath and Beyond stock. <br /><br />So it really depends on what you think the probabilities are. <br /><br />But neither odds for Bed Bath and Beyond stock or US powerball look very appealing which is why I won't be buying either.<br /><br />#stocks #investing #stockstowatch #bbbystock
