Why Aurora Cannabis’ Ginormous Gain Could Quickly Evaporate

Aurora Cannabis (NYSE:ACB) shareholders are probably on Cloud Nine after shares of the Canadian cannabis producer skyrocketed more than 50% on Friday and were up 94% at one point. The U.S. election results have investors more excited about Aurora than they’ve been in a very long time.

Are the good times ready to roll again for Aurora Cannabis? Don’t bet the farm on it. Here’s why Aurora’s ginormous gain could quickly evaporate.

Chart going up with cannabis and money in the background

Image source: Getty Images.

Anatomy of a short squeeze?

Around 19% of Aurora’s outstanding shares were sold short as of Oct. 15. When there’s good news for a stock that’s so heavily shorted, short-sellers usually scramble to cover their positions. This creates significant upward pressure on the share price, resulting in what’s called a short squeeze. It really looks like…

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