Hope springs eternally for these 2 knocked down stocks

Wall Street is trying to make this month a January to remember for investors, and the stock market’s performance remained on track on Tuesday. Profits for the S&P 500 (^GSPC 0.70%), Nasdaq composite (^IXIC)and Dow Jones Industrial Average (^DJI 0.56%) came in as much as 1% as market participants took to heart comments from Federal Reserve Chairman Jerome Powell.

Data source: Yahoo! Finance.

Some of the best performers on the day were stocks that broke down in 2022. Although both Coinbase worldwide (MINT 12.96%) and Bed bath & beyond (BBBY 27.78%) have faced serious challenges to their business models, shareholders were willing to double their potential to generate exorbitant long-term returns, and their stocks both posted a nice rally on Tuesday. Read on to learn more about why Coinbase and Bed Bath & Beyond gained ground and what lies ahead for both companies.

Coinbase bites the bullseye

Shares of Coinbase Global rose 13% on Tuesday. The cryptocurrency exchange services leader has taken steps to rein in its spending, even as it tries to capitalize on the turmoil hitting the digital asset arena to increase its market share.

Coinbase announced early Tuesday that it would lay off about 20% of its remaining workforce. The roughly 950 job reduction marks the third time Coinbase has resorted to cutting headcount to lower costs and focus more on long-term profitability. As part of a broader restructuring, Coinbase expects to spend between $149 million and $163 million, much of which will come from accelerating stock-based compensation plans.

The filing with the U.S. Securities and Exchange Commission (SEC) also noted that Coinbase believes several full-year 2022 business metrics are likely within the range it outlined in its most recent earnings release in early November.

While cryptocurrency markets remain at a low level, investors increasingly believe that Coinbase is best positioned to weather a crypto winter and emerge with increased market share when conditions recover. With the stock still down more than 80% from its high, Coinbase shareholders are hoping this is just the beginning of a longer turnaround.

Bed Bath & Beyond stays afloat

Elsewhere, shares of Bed Bath & Beyond rose 28%. The home goods retailer released third-quarter financial results for the period ended Nov. 28, which showed continued fiscal challenges but avoided the worst-case scenarios many shareholders had expected.

Bed Bath & Beyond’s quarterly results were not pretty. Net sales of $1.26 billion were down 33% year over year from a 32% decline in comparable sales. Operating cash outflow exceeded $300 million and Bed Bath & Beyond posted an adjusted loss of $3.65 per share. Virtually every aspect of the retailer’s business struggled as comparable digital sales fell 33%. Even the relatively strong Buy Buy Baby concept saw comparable sales drop in the low 20s for the quarter.

Still, investors seemed to take heart from the fact that Bed Bath & Beyond is still pursuing all available strategic options to get out of its hole. That could still involve filing for bankruptcy, but shareholders are more hopeful that Bed Bath & Beyond will find a buyer willing to take advantage of its real estate lease positions or some other alternative.

The immediate question for Bed Bath & Beyond is whether it will be able to pay interest on its debt obligations due in early February. If not, shareholders would finally have to give up hope of a recovery for the home goods retailer.