Rite Aid (NYSE:RAD) filed for bankruptcy, leading to speculation that RAD stock could become a “meme stock” like Yellow or Bed Bath & Beyond.
YELL and BBBY (and subsequent OTC traded YELLQ and BBBYQ, respectively) saw brief short squeezes after they filed for bankruptcy earlier this year.
RAD stock opened this morning at about 61 cents per share, a market capitalization of $36 million.
A Filing Long Overdue
Rite Aid is telling shareholders the Chapter 11 filing in New Jersey is an effort to “support long-term success.” It plans to sell its pharmacy benefit manager, now called Elixer Solutions and says it has a commitment for $3.45 billion in new financing. It also hopes the filing will help it settle lawsuits over the opioid crisis.
Rite Aid has been an untenable proposition since 2018. The company sold half its stores to Walgreens Boots Alliance (NYSE:WBA) for $5.175 billion after a complete merger failed before regulators.
Rite Aid was left as two chains, one on each coast, and a small pharmacy benefit manager then called Envision.
There was a brief hope that Amazon (NASDAQ:AMZN) might buy what was left, but nothing came of it. Amazon went in a different direction, opening online clinics and its own pharmacy.
A short squeeze was attempted early in October, with the stock at 52 cents. That seems to have faded out over the weekend.
At Stocktwits, one trader was suggesting Rite Aid might make a run higher, but other traders were blaming management for the company’s woes.
RAD Stock: What Happens Next?
Common stockholders are likely to be wiped out in the bankruptcy filing.
Only vultures are coming to Rite Aid’s rescue.
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As of this writing, Dana Blankenhorn held a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
