Is Anebulo Pharmaceuticals (ANEB) a Buy or Sell Based on Short Interest and Market Sentiment?

Anebulo Pharmaceuticals (ANEB), a clinical-stage biotechnology firm, has drawn mixed reactions from investors and analysts in late 2025. With a stock price that has swung wildly-up 119% in one year but down 52% in the past quarter-the company's investment profile is a study in contrasts. This analysis evaluates whether ANEB is a buy or sell by dissecting short interest trends, market sentiment, and peer comparisons, while contextualizing the role of investor psychology in shaping its trajectory.

Short Interest Trends: A Diminishing Bearish Signal

Short interest in ANEB has shown a notable decline, with the percentage of shares shorted relative to the float dropping by 4.0% since its last report. As of November 2025, 1.68% of ANEB's float is shorted, significantly below the peer group average of 4.03%. This suggests that bearish sentiment has moderated compared to its industry peers, who typically face higher short selling pressure. The short interest ratio (SIR) stands at 6.8 days to cover according to data, meaning short sellers would need nearly a week to offload their positions at current trading volumes. While this is not an extreme level, it indicates lingering caution among investors.

The decline in short interest could signal a shift in market psychology. Short sellers often retreat when negative catalysts are priced in or when positive developments emerge. For ANEB, the latter appears to be the case: the company recently secured a $994,300 grant from the National Institute on Drug Abuse to advance its lead drug candidate, selonabant, for treating acute cannabis intoxication in children. This funding, coupled with a strategic pivot to prioritize an intravenous (IV) formulation for pediatric patients, may have reduced perceived downside risk, prompting short sellers to scale back their bets.

Market Sentiment: A Tale of Two Narratives

Investor sentiment for ANEB is a patchwork of optimism and skepticism. On the positive side, the stock has a "Moderate Buy" consensus rating from analysts, with one "Buy" and one "Hold" recommendation. The average one-year price target of $5.61 implies a potential 111% upside from its current price of $2.60 according to data. However, this optimism is tempered by recent volatility. Between August and December 2025, the stock plummeted 52%, driven by strategic missteps such as the abandonment of a reverse stock split and the initiation of a costly self-tender offer. These moves, which aimed to reduce shareholder count and streamline operations, instead triggered a 21.2% single-day drop according to market data, underscoring the fragility of market confidence.

The company's financials further complicate the narrative. Anebulo reported a $8.5 million net loss for fiscal year 2025 according to financial reports, with operating expenses soaring due to clinical trials. While its Price-to-Book (P/B) ratio of 5.1x is lower than the peer average of 44.3x according to valuation analysis, it remains elevated relative to the broader pharmaceutical industry. This suggests that investors are paying a premium for ANEB's speculative growth potential, despite its lack of profitability.

Peer Comparisons: A Mixed Bag of Insights

ANEB's performance against peers reveals both strengths and vulnerabilities. Its lower short interest and higher gross returns of 119% in one year position it as a high-risk, high-reward play. However, its Sharpe ratio of -0.5655 over five years lags behind the peer average of -0.2260, highlighting its poor risk-adjusted returns. This discrepancy reflects the company's reliance on clinical trial outcomes-a volatile path for investors.

Peer companies in the biotech sector often balance short-term losses with long-term innovation. For ANEB, the focus on pediatric IV formulations of selonabant-a niche but urgent medical need-could differentiate it. Yet, this strategy also delays the broader commercialization of its oral formulation for adults, creating a trade-off between niche market capture and scalability according to industry analysis.

Investor Psychology: The Role of Short Sellers and Institutional Support

Short sellers have historically played a pivotal role in ANEB's story. The recent 4% decline in short interest according to market data may indicate a reduction in bearish bets, but it also raises the risk of a short squeeze if the stock rallies. However, such a scenario is unlikely without a material breakthrough in clinical trials or a significant shift in the company's financial strategy.

Conversely, institutional support has been a stabilizing force. A private placement offering in late 2025 attracted substantial institutional investment, signaling confidence in ANEB's long-term prospects. This backing could mitigate short-term volatility, though it does not address the company's fundamental challenges, such as its lack of revenue and ongoing losses.

Conclusion: A Cautious Case for a "Hold"

ANEB's investment thesis hinges on a delicate balance. The decline in short interest and analyst optimism suggest that the stock is no longer a pure short-term sell. However, its financial instability, high volatility, and reliance on speculative clinical outcomes make it a high-risk proposition. For investors with a long-term horizon and a tolerance for volatility, ANEB could offer asymmetric upside if its pediatric IV trials succeed. For others, the risks-particularly the potential for further earnings-driven declines-may outweigh the rewards.

In the absence of a clear catalyst, a "Hold" recommendation appears prudent. Investors should monitor the progress of ANEB-001's Phase II trials and the company's ability to secure additional funding. Until then, the stock remains a speculative bet, best suited for those who can stomach its inherent volatility.