Post by
FormerHedgie on Aug 22, 2024 11:29am
Short Interest Update - As Aug 15 - Went down ~10.k shares
Sorry, was a bit late on this update from August 15th.
A bit disappointed to see that only 10k share of the short position have been covered during the gap down on the Michigan lottery announcement.
I was hoping to see a considerable reduction in the short interest but that didn't occur. I interpret this is a continued barish indicator for PBL. Looking back, it seemed the shorts had some knowledge, potentially of the pending loss of Michigan, so their continuation of their short positions suggests they think more is to come.
As I outined in my previous post, I think the market doesn't have the clarity yet of what Pollard's future competitive positioning / success in the North Amerian iLottery is going to be as a result of the losses of New Hampshire and more recently Michigan to their NPI "partner", NeoGames.
In another post I sent the link to the Michigan State Lottery's award decision. I maintain that their immediate exclusion of Pollard for not having their own iLottery systems installed for a least a year in a US jurisdiction for at least a year is troubling.
I find myself wondering about what it is going to take for Pollard to win a competitive tender for any subsequent state lottery that would allow them to get their own iLottery platform installed. There are large and establisted competitors in NeoGames/Aristocrat, Sci-Games, Intralot already in place. The lotteries seems somewhat less price sensitive about the cost of someone operating their iLotteries. They seem more focused on capabilities, track record of consistent service delivery and good governance / compliance.
I think the market will need to see an iLottery win by Pollard in an American state before they get confort about Pollard's ability to compete and win in the US market. Until this is in place, the NPI contracts will continue to be a concern for the market (or they should be).
In the absence of a US State win, it may be prudent to discount the existing NPI contracts based on the signed contract length. This uncertainty I think will be problematic for investors. iLottery was the major source of growth and profitability for Pollard. The base ticket printing business and the associated business are stable, well run and profitable but the excitement from this stock was the iLottery growth and profitability profile.
As I posted before, given what we know in the market, I think there is more downside as the base valuation can only rely upon the ticket printing business. Its return to its traditional growth / profitability metric is encouraging but isn't enough to sustain even the current valuation.
Curious about other people's thought on these issues?