GNC Stock Soars on China Deal, Short Squeeze

GNC stock has rallied past a key trendline

by Patrick Martin

Published on Feb 13, 2018 at 10:33 AM
Updated on Jun 24, 2020 at 10:16 AM

GNC Holdings Inc (NYSE:GNC) stock is at the top of the New York Stock Exchange (NSYE) -- up 25.5% to trade at $5.26 -- after the health and wellness retailer announced a joint venture with Harbin Pharmaceutical to make and sell its products in China. The Chinese drumaker will also invest roughly $300 million in GNC, becoming its largest shareholder. The company also reported fourth-quarter earnings in line with analyst expectations. 

Prior to today, GNC stock had been carving out a path of lower lows since August 2015 that culminated in a record low of $3.13 on Dec. 28. Now, thanks to their second bull gap so far this year, GNC shares are trading above their 80-day moving average for the first time since early October -- a trendline that served as support in the third quarter of 2017 -- and have widened their 2018 lead to 42.6%.

A short squeeze is likely adding more fuel to GNC's rally, too. Short interest increased by 8.6% during the last reporting period to 27.16 million shares. This represents a whopping 40% of GNC's total available float.

Analysts also remain in the analysts bearish camp, with all six brokerage firms offering up "hold" or worse endorsements. Should the shares extend their recent rally off record lows, a round of upgrades could create even bigger tailwinds for GNC.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!