UPDATE: A report out Friday says the Federal Trade Commission is likely to block the Walgreens-Rite Aid merger.

Irrespective of the hoopla surrounding a possible merger, Rite Aid Corporation (NYSE:RAD) remains the Sears Holdings Corp (NASDAQ:SHLD) of pharmacies. What I mean is Rite Aid, specifically RAD stock, is a contrarian dream. It’s priced low, and with an overhaul, it could potentially get back on its feet. However, the company remains a dangerous bull trap, as witnessed by today’s massive 15% drop.

As we approach the deadline imposed by Walgreens Boots Alliance Inc (NASDAQ:WBA) as an incentive to push the Federal Trade Commission to a decision on the Rite Aid merger, could this time be different?

Before Walgreens put its foot down, analysts were mostly split down the middle as to what will ultimately happen. From some indications, the decision is still too tough to call.

The fact that industry experts remain hung up on the deal could be interpreted as a positive for RAD stock. InvestorPlace feature writer James Brumley made the case that the FTC is short-staffed, and unable to stick a decision.

Even if they do fill the gaps, some sitting members of the commission voiced strong concerns about “culling too much competition.” However, that’s not the end-all, be-all, so hope still exists for the Rite Aid merger.

The financial markets are also indicating that RAD stock has a fighting chance. And right now, RAD is playing right into my expectations for continued volatility!

Steep Challenges for the Rite Aid Deal

Another InvestorPlace contributor, Ian Bezek, recently broke down the bull and bear case for Rite Aid. Before making any rash moves on RAD stock, please read his excellent analysis.

No matter what angle you take, you inevitably arrive at the conclusion that RAD is a gamble. Indeed, Bezek acknowledges that Walgreens is unlikely to secure the Rite Aid deal. He writes that “FTC seems to dislike retail mergers as of late. And Walgreens is likely losing motivation about closing the deal. They might even pay the break fee instead of completing the acquisition.”

Although I don’t have skin in the game, I’ll say that the best idea is to assume a non-deal. Even if other analysts are unsure, the FTC has to overcome multiple challenges. It’s understaffed, it’s worried about competition (for good reason), and as Bezek notes, it hates the sector. I highly doubt that any single overture could allay these fears.

I also don’t trust the markets’ implied assessment. Well prior to me jumping into this mess — and I’ll freely admit I’m a “Johnny-come-lately” — the bulls were trumpeting RAD stock. They were flat-out wrong. When some doubled down on their optimism, they became disastrously wrong.

Needless to say, I’m in no mood to entertain market interpretations on Rite Aid. Instead, I’ll just go with common sense, and assume the worst-case scenario.

RAD Stock Has a Trust Problem

We’ll now look ahead a few weeks into the future. In this theoretical situation, the FTC rejected the Rite Aid deal. Where does RAD stock go from here?

I’m sure many investors are working on the model that the company is overdue for an upside reaction. Mr. Bezek writes that “you can make a good argument that RAD stock already reflects all this bad news — and then some. The market is clearly pricing Rite Aid stock as though the company is heading for an early death.”

I appreciate this argument. After all, we’re talking about RAD stock, not some piece-o-junk penny stock that no one has heard of.

But I also hope that they’ll appreciate when I say that Rite Aid is a falling knife. Maybe you’ll get lucky and pull off a miracle catch. Or maybe, you’ll just get stabbed. I, for one, have never been great with projectile sports.

All joking aside, the bullish reversal argument could have been made in February of this year. After falling sharply in the latter half of January, RAD stock showed signs of life. Obviously, nothing came of it. Then we saw two comeback attempts in March and April. Again, the markets failed.

Is June finally the month that RAD stock pulls it together? I simply don’t know the answer. But what I can say is that Rite Aid has been the perennial tease. To me, the question isn’t about whether or not the merger will happen. Instead, it’s about how many times a company can “cry wolf” before people stop caring.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.