Why Bed Bath & Beyond shares surged this week, then plunged.

5 months after saying he was a serious shareholder in Mattress Bathtub & Past, the activist investor Ryan Cohen offered out of the beleaguered retailer utterly.

Mr. Cohen’s funding agency disclosed on Thursday that it had offered off the whole lot of its stake within the firm, simply days after the Mattress Bathtub & Past’s shares surged as a lot as 70 p.c as small buyers additionally piled in to the inventory. Mr. Cohen, who based the web retailer Chewy and is the chairman of GameStop, has turn into a favourite of particular person buyers who’ve pushed meme inventory mania.

Mr. Cohen’s fund, RC Ventures, first revealed that he owned a 9.8 p.c stake in Mattress Bathtub & Past in March, and referred to as for a number of adjustments on the firm, together with a sale of the Purchase Purchase Child model. The house-goods chain settled with him a number of weeks later, including three of his nominees to the board.

However the retailer has continued to wrestle since then: Its chief govt, Mark Tritton, was ousted in June, and it reported a internet lack of about $358 million in the newest quarter with solely $140 million in money available, down from greater than $1.1 billion a 12 months earlier than. As of final week, its shares had fallen about 40 p.c because it introduced its cope with Mr. Cohen.

Its stock-market fortunes have been reinvigorated earlier this week after Mr. Cohen disclosed that he had bought inventory choices with strike costs of $60, $75 and $80 per share, properly above the inventory worth, which was nearer to $12 a share on the finish of final week.

Whereas Mr. Cohen had outlined these choices when he disclosed his preliminary stake, Mattress Bathtub & Past has since purchased again a few of its shares, making him a serious shareholder and requiring him to file up to date varieties.

The submitting despatched retail merchants right into a frenzy. They purchased $73 million in Mattress Bathtub & Past inventory on Tuesday and flooded Reddit’s WallStreetBets board with memes urging Mr. Cohen on.

The fast turnaround proved financially helpful to Mr. Cohen. He offered a portion of his funding in Mattress Bathtub & Past on Tuesday, at costs starting from about $18 to $26 a share and extra on Wednesday at $23 to $29. He additionally offered his much-discussed name choices Wednesday.

In all, Mr. Cohen seems to have earned almost $57 million on his Mattress Bathtub & Past funding, grossing $178 million on his sale this week of a stake within the firm that price him $121 million earlier this 12 months to amass. He misplaced simply over $1.6 million on his choices guess.

“Good for him,” mentioned Daniel Taylor, a professor of forensic accounting on the College of Pennsylvania’s Wharton College. “That’s prudent threat administration.”

Issues would possibly get right into a grey space, Professor Taylor mentioned, if Mr. Cohen had purchased the inventory and disclosed the calls solely to raise Mattress Bathtub & Past’s share worth and flip a revenue. However that kind of intent could be arduous to show, he mentioned.

Shares of the retailer fell greater than 40 p.c in after-hours buying and selling on Thursday, including to a drop of 20 p.c in the course of the common buying and selling session, following information that Mr. Cohen had taken his cash out of the corporate.

Stephen Gandel contributed to this report