After the trading bell on Thursday, there was a 35% drop in the shares of meme stock Bed Bath & Beyond, as billionaire investor Ryan Cohen decided to exit the struggling retailer of home goods.

This month had seen meme stocks record a stunning rally, but the investor decided to sell his stake in Bed Bath & Beyond, causing the stock to tumble.

Stock falls

The RC ventures of the investor had been the second largest investor of Bed Bath & Beyond, but the venture capital firm disclosed in a regulatory filing on August 16th that it no longer has any stake in the retailer.

The billionaire did not share his views about his company’s decision to sell the stake. The shares dropped in after-hours trading to $12.27.

This month had seen the stock record massive gains of almost 360% and the previous session had seen the share price go as high as $30.

However, the rout had started when RC ventures announced that it was planning to sell 9.45 million shares that were valued at $148.6 million.

The company also included the sale of its call options in January with the strike prices between the range of $60 and $80.

Record trading

On Tuesday, the bullish bet had first been disclosed by Cohen’s venture capital firm and this had generated a great deal of interest in the retail investor, and the stock enjoyed record trading.

However, the stock had been downgraded to ‘underperform’ by brokerage Wedbush and it had also adjusted its price target to $5, as it said that the current valuations did not reflect the actual value of the stock.

Market analysts also said that meme stock faithful were also spooked by the news that Ryan Cohen could be selling his stake in Bed Bath & Beyond.

As opposed to the frenzies that occurred in the past, these days retail traders prefer to follow institutional investors, rather than just blindly competing with companies that have poor fundamentals.

The retailer

In June, the retailer reported that its sales had declined and its chief executive was also ousted. In March, the company added three new directors in an agreement with Cohen.

The later also serves as GameStop’s chairman. But, a rebound in the stock market had rekindled trading in speculative options amongst retail investors in single stocks.

This was after they had not made any risky bets earlier in the year because of the volatility in markets. In August, the shares in Bed Bath & Beyond had seen a sharp run-up.

Those who had been betting against the meme stock had found a hole in their pocket of about $600 million.

However, there is an increase in the short interest to 55% of the free float of the company, as there were some attractive entry points available to bearish investors.

The company’s ticker had been trending high on stockwits.com, a social media platform that especially targets investors.