GNC Holdings Inc. (NYSE:GNC) Puts the Hammer to Short-Sellers

GNC Holdings Inc. (NYSE:GNC)

Robert Moran, interim CEO of GNC Holdings Inc. (NYSE:GNC), has reason to celebrate on a professional and personal level. This past summer Moran purchased $5 million worth of GNC stock. Then in the 4th quarter of 2016 disappointing financial results hit the company sending the shares lower – which continued a trend which began in the summer of 2015. Today GNC announced its Q1 2017 financial results and the shares gapped up to open at $8.65 – a 20% jump from yesterday’s close. GNC shares have been on an upward trajectory since the open and are currently trading around $9.35 on volumes over seven times normal.

Q1 2017 earnings came in at $23.9 million or $0.37 per shares which beat consensus estimates by $0.03 – $0.05 depending on which data is observed. Revenues, reported at $644.8 million, also beat street estimates by over $13 million.

GNC Holdings Inc. (NYSE:GNC) shares are on pace to have their best day since they debuted in 2011. However GNC shares have suffered recently. They are down over 34% YTD, down 36% for the quarter, and down 77% for the year. GNC shares are down over 72% from their 52-week high of $34.76 but are up over 44% from their 52-week low of $6.51. Short sellers have strong position on GNC though, no doubt, many are unwinding their shorts in the face of the market’s response to today’s earnings. Prior to today’s open, over 42% of the outstanding shares were held in a short position, making GNC one of the most shorted stocks of its capitalization.

CEO Moran partially credits the strong Q1 results on their new approach to consumers. Moran replaced the dated, and unpopular, Gold Card rewards program with My GNC rewards program. The new loyalty program is tracking to increase member visits to stores by 50%. Since the My GNC rewards system was instituted, over 5 million consumers have joined. GNC Holdings Inc. (NYSE:GNC) has been the subject of take-over rumors but the My GNC program may keep the company intact for the foreseeable future.

GNC Holdings Inc. (NYSE:GNC) ratings may have to be reviewed by several investment firms as well. Since July of 2016, six downgraded GNC shares with one downgrading GNC twice in three months. According to one service, eight firms follow the company and rate GNC shares. Five gave GNC shares a “Hold” rating, one assigns GNC an “Underperform” rating, and two rate GNC as a “Sell”.

4/18/2017
Ticker Symbol GNC
Last Price a/o 1:29 PM EST  $                      9.36
Average Volume                3,980,000
Market Cap (mlns)  $                  496.37
Sales (mlns) $2,540.00
Shares Outstanding (mlns) 68.56
Share Float (mlns) 68.27
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 42.81%
Short Interest Ratio 7.33
Quarterly Return -36.60%
YTD Return -34.42%
Year Return -77.21%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

Author: Steve Clark

Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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