After climbing to $3.50 per share, shares of 22nd Century Group Inc. (NYSE:XXII) have closed the week at $2.28. Many have been wondering why shares of XXII have dropped so much since early October's highs, and the answer is short sellers.
Short sellers seek to gain off of declining share prices by borrowing shares and selling them in the hopes that they can re-purchase those shares at a lower price at a a later date. By the looks of it, recent XXII shorts will be able to do just that.
With 9,966,801 shares of XXII held short as of the Wall Street Journal's update on October 24th, that represents roughly 11.6% of the float. Compared to prior short interest data, the increase in shares of XXII held short represents a rise of over 31%.
Many short-term traders bought shares on recent positive announcements including the company's first successful harvest of hemp plants and the raised price target by Chardan.
Profit taking by longer-term investors that had been holding the company all the way up seemed to have caused panic selling by those with lesser conviction or shorter time horizons, thus leading to a rapid decline in shares of the company in recent days. This is great news for bears, and bad news for bulls.
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