Penny Stock Swings Lower After CBD Deal

The firm just announced a CBD collaboration with International Flavors & Fragrances

The shares of Neptune Wellness Solutions Inc (NASDAQ:NEPT) are surging after the health and wellness company announced a strategic collaboration with International Flavors & Fragrances (IFF) to co-develop hemp-derived CBD products for the U.S. market. While the stock initially jumped on the news, it was last seen down 3.3% at $3.46.

NEPT stock is has been sliding since its late-July peak at $6.57, with its 10-day moving average most recently guiding the shares lower. Plus, the security breached its 200-day moving average in late September, a trendling that kept a lid on the shares in March and early April.

While there are only two analysts covering the security, both are extremely bullish, calling NEPT a "buy" or better. What's more, the consensus 12-month price target of $7.15 hasn't been touched since 2007, and is almost doubles current levels.

Short sellers, on the other hand, have been piling up their bearish bets. Short interest rose 10.9% in the last two reporting periods, and now accounts for 8.1% of the stock's available float. Continued short selling could create even bigger headwinds for NEPT.