Bed Bath & Beyond dives 50% in February – it's second-worst monthly performance ever – as the meme stock teeters on the edge of bankruptcy

• Bed Bath & Beyond stock plunged 50% in February as the home furnishings company struggles to stave off bankruptcy.
• The steep loss marks the company's second-worst monthly performance on record.

Bed Bath & Beyond's stock nosedived 50% in February as the embattled retailer struggled to stave off bankruptcy.

The meme stock closed February at $1.41 after falling 4.73% on Tuesday. February's steep loss marks Bed Bath & Beyond's second-worst monthly decline in history - the only time it fell more in a single month was during a record 61% slump in March 2020.

The home furnishings retailer's stock took a beating in the past year as it struggled with mounting debt and inventory snags.

Last month, it missed interest payments on roughly $1 billion worth of bonds and announced plans to close an additional 141 stores. Earlier last month, Wedbush Securities issued a grim share price target for the company, forecasting that its stock is headed for $0.

In a last ditch attempt to avoid bankruptcy, the company secured investor commitments to raise more than $1 billion in capital. The firm plans to issue convertible preferred securities and warrants, according to a statement. It said it would immediately raise $225 million through the sale in a deal that would eventually rack up more than $1 billion, per the Wall Street Journal.

A convertible preferred stock is a type of equity security issued by companies, giving the investor the right to convert its preferred stock into common stock at a discount to the market price.

But legendary investor Michael Burry flagged risks to the last-minute financing deal, issuing a grave warning to meme-stock fans. "It's time memesters look up what a death spiral convertible is," he said in a now-deleted tweet.

Meanwhile, Bed Bath & Beyond is also drawing $100 million from a credit line to repay outstanding debt.

"The clock has been ticking for Bed Bath & Beyond to raise some cash but securing the money will only reset the clock. Bed Bath & Beyond will need to deliver its turnaround plan – and quickly – if it raises the cash. How much time it has will come down to how much it can stem the cash burn and improve sales," Joshua Warner, market analyst at City Index, said.