Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) shares surged more than 50% in after-hours trading yesterday after the company’s fiscal Q1 results exceeded expectations and they announced a new deal with The Coca-Cola Company (NYSE:KO). The world’s largest beverage company will buy a 10% stake in the Waterbury, Vermont-based company for $1.25 billion. The 10-year deal shows that Keurig can do the same to cold beverages what it has done for hot tea and coffee.

Green Mountain Coffee Roasters Logo

Short sellers questioned Green Mountain’s transparency

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) will be launching its Keurig cold system in late 2014 or 2015. It will soon let you make The Coca-Cola Company (NYSE:KO) beverages at the push of a button. The announcement has created a good short squeeze. Short sellers have been targeting Green Mountain for the past several years. Renowned investor David Einhorn has also been shorting the stock. Short sellers questioned Green Mountain Coffee Roasters’ accounting practices, sales figures, expenditures, and competitive position.

Green Mountain shares reach an all-time high

Despite all the attacks, Green Mountain shares continued to rise through 2013. The stock has gained 72% over the past 12 months. And the 50% gain in yesterday’s after-hours trading will ensure that the stock opens at its all-time high.

Short sellers didn’t give up on Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) simply because its shares continued to climb higher. The company has about 149 million outstanding shares. Short interest in Green Mountain stood at 31 million shares in February 2013, which steadily rose to more than 38 million in January 2014. The deal with The Coca-Cola Company (NYSE:KO) has painted a rosier picture of the coffee-dispenser company. So, let’s see what short sellers are going to do.

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) has been leading the single-serve coffee industry. But the company’s revenue came under pressure after patent on its flagship product Keurig K-Cup expired. The latest focus on cold beverages would give Green Mountain a new area for growth.

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) were last up 39.40% in pre-market trading.