Sam Adams just gave the bears a big squeeze. Boston Beer Company, the brewer of the well known Sam Adams beer, sent short sellers screaming when it reported a better than expected second quarter last week.

A small but completely unanticipated 1% increase in sales and a much-improved profit margin led to a dramatic 57% earnings beat. The stock soared as much as 22% intraday but closed at $154, up 14% on the day.

Before the release, the bears were feeling pretty good. The stock was down 30% in the past year and down 58% from its 2015 high of $350. Short interest in the stock equaled 25% of the company’s shares and hit an all-time high in early July.

Confidence from the shorts seemed to have some solid grounding:

In June, brokerage firm Cowen lowered the stock to a rare Sell, noting that, “We believe that SAM’s market leading positions within craft beer and cider, which remain under pressure, represent the potential for continued share losses and risk for further downward guidance revisions.”

CEO Jim Koch publically complained that the Justice Department’s approval of the Anheuser Busch-InBev merger allowed Big Beer to go on a shopping spree, buying up a mountain of craft brewers. Koch lamented that the small brewers have less leverage against these beer goliaths. An interesting note is that Koch considers Boston Beer a craft beer company, despite the fact that its $900 million in annual sales dwarf any craft brewer by the thousands.

Most reassuring for the bears was data from retail measurement service Nielsen, which supposedly showed further deterioration in Boston Beer sales.

In conjunction with all these negative data points, Goldman Sachs downgraded the stock to Sell just days before the second quarter earnings release. If there’s one thing to sharpen a bear’s claws, it’s a downgrade from an influential brokerage firm immediately before earnings.

It’s no surprise that Sam Adam’s sales have been losing luster. Despite being the Father of the Craft Beer Revolution, Boston Beer finally began to feel the pain of sales lost to the hundreds of micro-brews launched in the past several years. The popularity of craft cocktails has not helped as millennials shift consumption to Knob Creek Manhattans from Rebel Pale Ale drafts.

Jim Koch was one of the first micro brewers of the craft beer revolution. In 1984, following his father’s recipe, he launched Boston Beer’s first brew, a Vienna lager named after a fellow Bostonian Sam Adams, who had also shared the love of brewing with his father.

Boston Beer went public in November 1995. From the start the bears were circling the company, making bets on when the craft beer “revolution” would hit a wall. Like most skeptics facing a secular shift, the bears were WAY too early- twenty years to be exact.

Distribution and production did hit some snags early on when the company’s sales zig-zagged for a few years. The company hit its stride in 2004. Sales grew every year from that point on, blossoming from $214 million to almost $1 billion in 2016.

Boston Beer is now the victim of its success. Despite significant inroads made with new products like Twisted Tea and Truly Spiked Sparkling Soda, these products are just too small to make a dent in Boston Beer’s total sales.

The second quarter’s tepid jump was helped by early shipments for the July 4th holiday and strong sales of Twisted Tea and Truly Spiked. The long term success of these products is yet to be proven and they are likely much more seasonal than Boston Beer’s other products. Come October, cans of light sparkling spiked soda water will likely be replaced with glasses of Merlot.

Although it’s possible that a new seasonal brew for Sam Adams helps regain the brand’s footing, the more likely scenario is that an overall slowdown in craft beer consumption will hit Sam Adams doubly hard.

I haven’t been involved in Boston Beer’s stock as a bull or a bear but am always looking for new ideas. While I commiserate with the pain felt by those short Boston Beer’s stock heading into the earnings release, the spike up might be just the tonic for new short positions.

My Profit Catalyst Alert service is always looking for new long and short ideas. I just closed out a bearish option position with a 100% gain in less than two weeks, and I’m digging deep for new positions to take advantage of market volatility.