Bed Bath And Beyond: U.S. Court Ruling: Former Bed Bath & Beyond Investor Faces Lawsuit Over Emoji-Filled Tweet
In a significant legal development, a U.S. court had allowed investors to proceed with a lawsuit against former Bed Bath & Beyond investor Ryan Cohen over a tweet that featured a seemingly encouraging emoji just before the company filed for bankruptcy earlier this year.
On Thursday, Washington, D.C. District Judge Trevor McFadden ruled, stating that Cohen and his firm must address the fraud allegations put forth by the plaintiffs, including the claim that Cohen’s use of a happy moon emoji was misleading.
In 2022, Cohen made substantial investments in the struggling home goods firm and secured the appointment of three of his associates to the company’s board while sharing his ideas for turning the business around.
Following Cohen’s moves, discussions about Bed Bath & Beyond began to circulate on social media as his hundreds of thousands of followers took note.
The pivotal tweet was posted on August 12, 2022, in response to a CNBC report predicting that Bed Bath & Beyond’s stock would plummet to $1. Alongside a photo of a woman shopping at the store, Cohen added the caption, “At least her cart is full,” accompanied by a cheerful moon emoji.
The tweet quickly ignited conversations on Reddit and Twitter throughout the day and the weekend.
Many investors interpreted Cohen’s use of the joyful moon emoji to signal his unwavering belief that Bed Bath & Beyond’s shares would skyrocket, earning the colloquial label of a “meme stock.”
Judge McFadden noted that meme stock investors perceive such symbols as indicating that the stock is set to take off.
Consequently, it is plausible that meme stock investors may have perceived Cohen’s tweet as an explicit call to action, prompting them to act on their assumptions about Bed Bath & Beyond.
Before the tweet, the company’s shares were valued at $10.63 on Friday morning.
However, by the close of Monday’s trading session, they had surged to $16, driven by a flurry of trading activities.
The court’s ruling sets a precedent for legal scrutiny of social media communications from prominent investors. It underscores the impact such messages can have on the volatile world of meme stocks.