Digital Power Corporation (NYSE:DPW) is up 672 percent over the last two weeks on exposure to bitcoin trends. But one short seller on the Street is calling for an inevitable bust.
TheStreetSweeper issued a short report Tuesday justified by Digital Power’s poor earnings history and shaky fundamentals. The firm reported losses six of its nine years as a public company, with a 36-percent revenue decline driving recent $1 million losses.
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“So Digital has jumped onto the investor-frenzied cryptocurrency rollercoaster to try to reinvent itself,” TheStreetSweeper wrote. “But the market is missing the risks that now lurk around every bend.”
One such risk is said to be seen in Digital’s selling of 640,000 shares, which dilutes shareholder stock. Majority investors are also cashing out at recently inflated prices, compounding the firm’s -$4 million in working capital and $9.8 million in short-term liabilities.
Other alleged warnings include “curious perks for the CEO’s daughter,” avoidance of the stock by reputable entities and a gaming company’s rejection of bitcoin transactions.
The critic recommends nearly 1,000 other bitcoin-related plays before Digital Power, such as the Bitcoin Investment Trust (OTC:GBTC) and NVIDIA Corporation (NASDAQ:NVDA).
Investors are seemingly dismissive of the short-seller's thesis, as the stock remained relatively unmoved on the day. At time of publication, shares were trading up 15 percent at $4.41.
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