Acacia News May Have Triggered Big Short Squeeze

Acacia Communications, Inc. ACIA started off the week’s trading up more than 7 percent on a strong day for the market. The big move comes after the company announced Monday that it has begun sampling its coherent CFP2-DCO module, which the company says has four times the faceplate capacity as the current CFP-DCO model.

“The CFP2-DCO form factor requires significantly low power consumption for pluggable coherent optics and substantially increases faceplate density,” Deutsche Telecom AG Vice President Axel Clauberg explained in a press release.

Acacia shares have been on fire in 2016, up 118.1 percent year-to-date. However, traders have taken profits on the stock in recent weeks. Prior to Monday’s move, Acacia shares were down 38.3 percent in the past month.

At the same time, short interest in the stock remains extremely elevated at 33.3 percent with 2.9 million shares short. With only 35.8 million total shares, the heavy short interest makes Acacia one of the most heavily-shorted stocks in the market.

The news about the CFP2-DCO may have caught a number of these short-sellers off guard, triggering Monday’s short squeeze.

With only around 1 million shares of volume in the first hour of trading, the potential Acacia short squeeze could still have room to run.