What happened

Drugstore company Rite Aid (RAD) saw its shares rise 15.6% on Tuesday. After closing at $5.91 on Monday, the stock opened Tuesday at $6.18 and rose to a high of $7.37 in the first couple of hours of trading, its highest point since Sept. 22. It closed the session at $6.83. The stock is still down more than 52% this year. Its 52-week low was $3.84, and its 52-week high was $15.62.

So what

The company released no news that could explain the session's stock price gains, though the S&P 500 gained about 0.9% Tuesday. Rite Aid's last quarterly report was delivered more than a month ago, on Sept. 29.

So what could have pushed the stock higher Tuesday? The best explanation may be a meme-trading-fueled short squeeze.

Rite Aid stock has a relatively high gamma squeeze score rating of 94.80 on Fintel, putting it at No. 38 out of the 305 stocks on the list. Rite Aid has been a popular stock among retail traders, and the company held its first retail-investor-oriented shareholder webcast in August. 

Now what

The momentum is likely to be short-lived. In Rite Aid's fiscal 2023 second-quarter report, management said it doesn't expect the healthcare company to become free-cash-flow positive again until sometime later in the fiscal year. Rite Aid has fallen behind its two largest competitors, CVS Health and Walgreens Boots Alliance, particularly in the areas outside of retail sales. In the report, Rite Aid said it had revenue of $11.9 billion through 26 weeks, down 2.9% year over year. It also reported, through 26 weeks, a net loss of $441.5 million, compared to a loss of $113.3 million in the same period a year earlier. The company has two segments, Retail Pharmacy and Pharmacy Services, and the latter is struggling. Through 26 weeks, the Pharmacy Services segment reported revenue of $3.45 billion, down 8.4% year over year.