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The Probable Reason Why MannKind Corporation Is Rallying Again

By Brian Feroldi – Updated Sep 5, 2018 at 10:31AM

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Shares soar for the second day in a row. What can explain the bullish move?

What happened

Investors in MannKind Corporation (NASDAQ: MNKD) are having another pleasant day. Shares were up 37% as of 10:05 a.m. EDT on Wednesday. That's quite a bullish move for a single day, but it's all the more impressive given that the stock also jumped 89% higher on Tuesday. 

So what

There isn't any news today that can justify the huge gain, so the most likely explanation for today's price is a short squeeze. More than 28 million shares of MannKind's stock were sold short as of Aug. 15, so millions of shares are probably being purchased today to cover the short in response to yesterday's news that MannKind has struck up a brand-new collaborative partnership with United Therapeutics (UTHR 0.94%).

Man cheering while looking at a laptop

Image source: Getty Images.

As a reminder, that deal will net MannKind more than $55 million up front, which should buy the company about six more months of runway. That's a big enough number to silence the critics who believe that this company is heading for bankruptcy (at least for now). 

Now what

This short-term price jump is a welcome relief for MannKind's long-suffering bulls. However, investors need to remember that success still hinges on the company's ability to turn Afrezza into a commercially viable product. Since there's a long road ahead of the company on that front, I think that skepticism is still warranted.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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