Zynerba Shorts May Be Getting Squeezed

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Zynerba Pharmaceuticals Inc ZYNE is making a big move on Wednesday without any major company-specific news to speak of. The 6.3 percent gain coupled with the stock’s large short interest suggests a short squeeze may be in play.

Zynerba specializes in developing synthetic cannabinoid therapeutics. A new study by Arcview Market Research found that Americans spent $53.3 billion on legal and illegal marijuana in 2016. Legal marijuana sales topped $6.7 billion last year, up 30 percent from 2015. Illegal marijuana sales still dwarfed legal marijuana sales, making up 87 percent of the market share.

Of course, marijuana remains illegal on a federal level, and a number of traders are making big bets against Zynerba. The stock has surged 176 percent in the past year, and shorts have piled on. Zynerba’s short interest has tripled since this time a year ago.

According to shortsqueeze.com, Zynerba currently has an elevated short percent of float of 22.8 percent. The stock has more than 1.4 million shares held short with 10.6 days to cover.

Short sellers have been burned badly betting against Zynerba in the last year, and every move higher puts more pressure on them to cover their positions. If a short squeeze is responsible for Wednesday’s big move, the buying may be just getting started.

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