I will be very interested to see the short interest update
Yesterday's rally in the stock was very impressive but it felt a lot like a short covering rally. I think the only way that this can be confirmed is when the short interest update comes at the end of the month (at least for me as I don't have access to Bloomberg, StarQuote etc anymore unfortunately). I suspect the short interest will be significantly lower. Unfortunately, by the time people will get to see this you may have already bought the short cover spike.
I think it is important to remember that shorts can aggressively bid up the stock because they are just locking in their profit. Assume they shorted at $35 - $40 and are now covering at $18-20. If they bid the stock up 10% it isn't an issue for them. The problem is, for long investors, if you but the short cover rally, the stock can often go back down significantly once the shorts have covered. In this cases, there are 220k shares short that need to be bought. You should be mindful of the volumes as the shares spike.
For me, I always have a fundamental buy price and sell price back by resaeach and some basic valuation metrics. This way, you can be more assured of when you buy and sell that you aren't getting whip sawed by shorts, or algorythmic or pro traders etc... I guess this is a bit of a cautionary message.
Having said all of that, the quarter was strong and the fundamentals were improving as I wrote about in the Q2 preview. Of course, the big cavaet was the MIchigan announcement. People need to read the bid and response from the State because it is problematic. It would seem others don't see the same potential issue I do. I know that some of the contracts have longer-terms but it doesn't remove the fundamental issue of NeoGames now competing and winning when NPI contracts come due.
The acquisition announcement was a nice surprise but contributes to the legacy business. Clearly, my hopes that Pollard would somehow find a way to the the iLottery business from Aristocrat didn't happen so that competitive problem still exists.
For me to feel more assured, I need to see Pollard win a US lottery contract with a major state lottery using their Next Generation Lottery offering before I will feel much more confident. The competitive environment is definitely escalating. I REALLY hope Pollard gets everything together. It is a great company and I really want them to proceed.
Good luck to everyone, this is challenging time to be involved with the stock with so many complicated dynamics at play.