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Bed Bath & Beyond's stock now costs 31 cents. How low can it go?

SCOTT SIMON, HOST:

Buying one share of Bed Bath & Beyond now cost only 31 cents. Of course, that's a sign of a company in trouble - near bankruptcy. But how low can this stock or any stock actually go? NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: Ten years ago, the stock price of Bed Bath & Beyond reached $80. Earlier this year, it cost $5 a share. Now this...

(SOUNDBITE OF COINS CLATTERING)

SELYUKH: ...Is all it takes to be a Bed Bath & Beyond shareholder.

BLAIR DUQUESNAY: We call this a penny stock when we're trading below a dollar.

SELYUKH: Blair duQuesnay is a senior adviser at Ritholtz Wealth Management. A penny stock sounds lousy, and it is. It's Bed Bath fighting for survival, warning of a bankruptcy again and again, then getting a lifeline from a lender or an investor. Rinse, repeat.

ASWATH DAMODARAN: At this point, you're getting what I call the desperation capital.

SELYUKH: Aswath Damodaran is a finance professor at New York University. Bed Bath still has a few hundred stores and the Buybuy Baby chain, but it's been facing pretty fundamental problems - losing shoppers and, therefore, money, struggling to compete online and lately to even keep its shelves stocked. Damodaran has an ominous view of its chances.

DAMODARAN: Bed Bath & Beyond at this point resembles that character in a horror movie...

(SOUNDBITE OF MUSIC)

DAMODARAN: ...The teenage boy or girl who pauses outside the door to the basement. And they do what every horror movie character does, which is open the basement door.

(SOUNDBITE OF MUSIC)

DAMODARAN: You know, this isn't going to end well.

SELYUKH: But as long as there's a glimmer of hope for Bed Bath, duQuesnay says...

DUQUESNAY: It's pretty hard for a stock that's still trading to actually hit zero.

SELYUKH: As long as someone is out there in the market betting that Bed Bath is worth something, maybe it will turn around or even get acquired.

DUQUESNAY: They are going to have a price, even if it's one penny.

(SOUNDBITE OF COIN CLATTERING)

SELYUKH: Given months of bankruptcy warnings, these are long odds, which is why duQuesnay suspects at this point people trading Bed Bath shares probably aren't really thinking of the company's long-term future. Even traders who bet against the company are usually gone by the time you hit penny stock. That leaves mostly speculators - chasers of a quick profit.

DUQUESNAY: It's pretty easy for a stock to move a couple of cents, and that's a big percentage gain - you know, a pop from 35 cents to 70 cents. It's still a 70-cent stock, but you've gotten 100% return.

SELYUKH: This will not last forever. The Nasdaq, the exchange where Bed Bath shares are listed, will eventually kick out a company whose stock price stays under a dollar for too long. Getting delisted doesn't automatically mean shares hit zero and stop trading, but they usually go to a sort of dodgy flea market of stocks, what's known as over-the-counter markets - not a place for prominent, healthy companies. And so Bed Bath is throwing every Hail Mary to avoid that.

DAMODARAN: Thinking about every exit hatch that they can find because you're on life support here.

SELYUKH: The company's latest gambit is called a reverse stock split. It's a financial trick that fuses a bunch of shares into a single one, meaning fewer shares are out there. But each one is more valuable than before, maybe no longer worth pennies, but back to a few dollars. Maybe this buys time and goodwill for yet another lifeline and keeps the basement door closed for now, because in bankruptcy is when shares really can become worthless.

Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.