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Why Rite Aid, MannKind, and Sears Holdings Slumped Today

By Dan Caplinger - Oct 11, 2017 at 5:09PM

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Even though the market gained ground, these stocks dropped. Find out why.

The stock market gained ground on Wednesday, with major benchmarks making modest moves higher that were sufficient to keep sentiment on Wall Street positive. Investors continued to see the markets walk the tightrope between solid economic progress and potential geopolitical turmoil, and a focus on domestic issues like monetary policy and tax reform kept most market participants within their comfort zones. Yet some companies had bad news dog their shares. Rite Aid (RAD 4.44%), MannKind (NASDAQ: MNKD), and Sears Holdings (SHLDQ) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Rite Aid deals with threats

Shares of Rite Aid fell 4.5% as investors continued to fear that the worst might be ahead of the drugstore retail chain. After having had to accept successively less favorable offers for a portion of its store network in order to satisfy antitrust regulators, Rite Aid now has to face the possibility that e-commerce specialists will seek to disrupt the prescription drug industry. Employers and health insurance companies are looking for any way possible to cut costs, and they'll have a big incentive to try out alternatives to traditional pharmacies if they can lead to further savings. With Rite Aid already looking at challenges to restoring the health of its fundamental business, shareholders are taking on substantial risk in hopes for a complete turnaround.

A sampling of Rite Aid's various store-brand items.

Image source: Rite Aid.

MannKind cashes in

MannKind stock plunged 18.5% after the biotech company took the opportunity to do a secondary stock offering. Having seen its shares soar in recent weeks, MannKind sold almost 10.2 million shares at $6 per share, realizing net proceeds after offering expenses of nearly $58 million. The money will give the company some breathing room as its key product Afrezza looks to gain traction in the market. Yet with the offering price being more than 200% higher than where the stock traded as recently as late September, it's going to take considerable future success for MannKind in order for its newest investors at its secondary offering to reap big rewards.

Sears sees its northern neighbor give up the ghost

Finally, shares of Sears Holdings fell 7%. The company's Sears Canada counterpart, in which the U.S. retailer has a minority interest, said that it will look to the courts to approve a plan to liquidate its remaining assets and wind down its operations. Sears Canada has been bankrupt since early summer, and the company expects its liquidation efforts to be mostly complete by the beginning of 2018. For Sears Holdings investors, the news isn't surprising, but it still seems to foretell the eventual likely outcome of the brand's U.S. retail locations as well. If the end-of-year high season for shoppers falls short of hopes, then it could be the breaking point for Sears Holdings.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Sears Holdings Corporation Stock Quote
Sears Holdings Corporation
SHLDQ
Rite Aid Corporation Stock Quote
Rite Aid Corporation
RAD
$11.05 (4.44%) $0.47

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