Even amid Rite Aid Corp.’s bankruptcy, the troubled drugstore chain has sparked meme-stock chatter. Trading in Rite Aid’s stock was halted premarket Monday after the company filed for chapter 11. Bonds issued by Rite Aid
also sold off heavily, and the New York Stock Exchange began delisting proceedings against the company. Trading over the counter, the stock resumed trading Tuesday and ended the session down 66%.
Also on Tuesday, Rite Aid announced that it received approvals from the U.S. Bankruptcy Court for the District of New Jersey for its “first day” motions related to the chapter 11 filing. The court granted interim approval for the company to access up to $3.45 billion in debtor-in-possession financing from some of Rite Aid’s lenders, providing the company with liquidity. Related: Rite Aid’s bonds sell off after bankruptcy filing as stock is halted Stocktwits, a social platform for investors and traders, tweeted Monday that investors think Rite Aid might be setting itself up for a meme-stock run, citing the company’s iconic brand, high short interest and the catalyst of bankruptcy.
The platform also acknowledged the possibility that Rite Aid shares could plunge. “Many investors and traders are fearful of another potential plunge once trading resumes,” Stocktwits wrote in a newsletter Monday. “However, others are eyeing the situation given its ‘meme stock’ potential. Time will tell.” Rite Aid’s bankruptcy was hardly a bolt from the blue, with the Wall Street Journal reporting in August that the company was more than $3.3 billion in debt as a result of opioid-related lawsuits. Earlier this month, the New York Stock Exchange notified Rite Aid that the company is “no longer in compliance” with the exchange’s minimum pricing and capitalization standards. Related: Rite Aid’s stock tumbles 55% to join its cratering bonds after bankruptcy filing In July, Rapid Ratings, a company that assesses the finances of public and private companies, warned that Rite Aid posed a high default risk. Rapid Ratings pointed to its core health score, which evaluates medium-term sustainability based on operational efficiency and competitiveness, as well as its financial health rating, which measures short-term default risk. Rite Aid’s core health score was 30, suggesting low levels of efficiency and a performance that is not sustainable over the long term, according to Rapid Ratings, while the financial health rating for Rite Aid was a “very unimpressive” 21. Related: Rite Aid gets listing warning from NYSE Rite Aid’s foot traffic has fallen significantly in recent years, with visits down around 35% compared with January 2019, according to data-analytics company Placer.ai. Rite Aid’s …