What happened
Shares of Rite Aid (RAD -31.13%) were up 85.6% for the week as of Friday at 11:30 a.m. ET, according to data provided by S&P Global Market Intelligence. The drugstore company's stock closed last week at $1.60 a share, then rose to as high as $3.14 on Friday. The struggling company's shares were pushed up by a short squeeze. The healthcare stock is still down more than 6% this year.
So what
Rite Aid's shares had been rising slightly since they hit their 52-week low of $1.42 on July 6. The company announced its fiscal 2024 first-quarter earnings on June 29. In the report, it said it lost $306 million, or $5.56 in earnings per share (EPS), compared to a loss of $110 million and an EPS loss of $2.02 in the same period a year ago.
The company also forecasted a loss of $650 million to $680 million for the year. Revenue was down, too, but not as dramatically. Rite Aid reported it was $5 billion, down 5% year over year. The company has said it has a turnaround plan, but it hasn't had much effect yet.
The reason for the rise this week was that retail investors, seeing the stock was heavily shorted (about 23% of its shares), responded with a short squeeze that drove the stock up. Fintel, as of Friday, gave Rite Aid a short-squeeze score of 84.23, No. 191 on its short-squeeze leaderboard.
Now what
The move up is not likely to hold because Rite Aid's fundamentals remain problematic. The company has not had a profitable year since 2018. It also has been sued by the Justice Department for the company's role in the opioid crisis, with the suit saying the company violated the Controlled Substances Act.
