Revlon (NYSE:ROUND) the stock has been down all day since Citigroup (NYSE:VS) obtained a court decision against some of its creditors.

A federal appeals court has ruled that Citibank accidentally sent $500 million to multiple Revlon lenders and that all funds must be returned. Reuters reports that: “In a 3-0 decision, the 2nd United States Circuit Court of Appeals in Manhattan ruled that the lenders were not entitled to reimbursement and were told the wiring was a mistake.”

At the time of this writing, REV stock is down nearly 5% for the day after gradually falling since markets opened. Today’s news may not drag stocks down for too long, but that doesn’t mean investors shouldn’t approach it with caution. Let’s take a closer look at this summer 2022 breakout and why its status as a meme stock hasn’t made it profitable.

What’s going on with REV Stock

Despite today’s victory, Citigroup lost this case the first time around. While acting as Revlon’s agent, he initially transferred nearly $900 in prepaid funds to the cosmetics company’s creditors. As Looking for Alpha reports: “The defendants – including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management along with seven others – claimed they had been owed payment since [Revlon] was in default on a loan. This grim fact should have alerted investors to the potential problems looming over REV shares.

Since then, defaulting on a loan has been the least of Revlon’s problems. As reported, the cosmetics retailer filed for bankruptcy in June 2022, only to be propelled to meme stock stardom. The prospect of helping save a bankrupt company that Wall Street had long ignored probably won over the r/WallStreetBets crowd. While the short squeeze momentum helped push REV stock off Wall Street’s radar, it failed to keep it in the green. REV is currently down more than 20% for the month despite a large investment of Morgan Stanley (NYSE:MRS) up to 400,650 shares.

“A Revlon takeover could possibly lead to a short squeeze” InvestorPlace assistant writer Eddie Pan speculated. “As of July 31, REV stock has a large short float percentage of 35.6%, equivalent to 2.76 million shares sold short. In the event of a buyback, the stock could take off.

The essential

So far, however, nothing we’ve seen from Revlon indicates that the squeeze is likely to continue. Momentum shifted as short sellers and contrarian investors moved on, likely annoyed by the flash-in-the-pan feel that REV stock turned out to be.

Today’s news probably won’t end up hurting Revlon, but it won’t help either. The fact that C stock is up but REV is down should tell investors all they need to know.

At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.