The naysayers keep coming, putting their bearish money where their mouths are when it comes to New Age Beverages (NASDAQ:NBEV). There were a record 21.1 million shares of the functional-beverages distributor sold short at the start of this month, a sevenfold increase over the past year.

It makes sense for short interest to be higher than it was a year ago when the stock was a lightly traded investment. However, even if we roll all the way back to September of last year -- when trading volume was triple what it is now and the stock peaked at nearly double today's levels -- there were less than 8.1 million shares betting on a decline. There have never been as many people betting on New Age Beverages to keep sinking, and oddly enough, this is probably the best time to consider a long position.

New Age Beverages' Bob Marley-licensed One Drop canned beverages.

Image source: New Age Beverages.

Squeeze me

New Age Beverages was well off the investing radar until it announced late last summer that it would be introducing CBD-infused drinks to its existing product line of ready-to-drink coffee, tea, and other functional retail beverage offerings. It got caught up in the frenzy that was driving cannabis stocks higher at the time, and it probably wouldn't have been the worst idea on the planet to short the stock at the point when hype was louder than substance. 

However, New Age Beverages closed out 2018 with a brilliant deal to acquire Morinda in a cash-and-stock deal that would be accretive to its existing shareholders. Using its buoyant shares -- New Age Beverages wound up skyrocketing 140% in 2018 -- New Age Beverages was able to buy the much larger Morinda at a discount to its own valuation. The Morinda deal not only added the internationally popular Tahitian Noni Juice line to its portfolio, but it also opened up retail space worldwide for its own fledgling beverage products given Morinda's presence in 60 countries.

New Age Beverages posted its first full quarter of results with Morinda on its books earlier this month. Net revenue more than quintupled -- up 404%, to $58.3 million. Gross profit improved 14-fold.

A surge in operating expenses resulted in a widening operating loss, and the bottom-line deficit would've expanded if it hadn't been for one-time favorable items. At the end of the day, however, New Age Beverages is now a more well-rounded company. It's a few effective cost-control measures away from profitability, and it's still in a prime position to cash in on the inevitable influx of CBD beverages. 

New Age Beverages is finally reasonably priced at a little more than one time this year's projected revenue, and that's without the CBD spigot turned all the way. Profitability should come in the next few quarters.

The 21.1 million shorts would've made a killing late last summer when the mania was driving the stock to within pocket change of double digits. Now they're just setting themselves up for the next big short squeeze.