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StreetSweeper: Digital Ally's Stock 'Will Get Chopped,' Is A 'Poor Copycat' Of Taser

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StreetSweeper: Digital Ally's Stock 'Will Get Chopped,' Is A 'Poor Copycat' Of Taser

Digital Ally, Inc. (NASDAQ: DGLY)'s stock has lost nearly 60 percent over the past year, but the shorter-term performance paints a different picture.

The producer of digital video imaging and storage products for use by law enforcement officials rallied 50 percent over the past month following a string of deadly events in the U.S., especially those involving the fatal shooting of police officers in Dallas, Texas.

Noted short-seller TheStreetSweeper doesn't think the near-term rally in Digital Ally is sustainable and even expects the stock to "get chopped" as the company is merely a "poor copycat" of TASER International, Inc. (NASDAQ: TASR).

Related Link: Why Law Enforcement Stocks Continue To Sell Off

Colberg stated that police forces across the U.S., including Dallas, wear Taser's "state-of-the-art" Axon body camera. Meanwhile, 43 percent of Digital Ally's sales are composed of the "old-time" in-car video camera and a "tiny portion" of its business is in the body camera segment, which actually cost "surprisingly more" than Taser's.

Colberg added that while Taser's sales have surged over the past year, Digital Ally "sometimes has to discount products to get them out the door."

"The most troubling issue is Digital Ally's consistent revenue trend," Colberg wrote. "Revenue has gone one way over the past four quarters ... down, down, down. And earnings remain red, red, red."

Bottom line, Digital Ally is a "mini-me" knock-off of Taser and its stock has recently "gone nuts." However, its business "can't support that price" and shares are "running headlong toward a crushing $3.60 share price."

The stock traded at $5.35, down 3.4 percent in Friday's session.

Posted-In: body cameras Digital Ally Body Camera police Sonya ColbergShort Sellers Short Ideas Movers Trading Ideas Best of Benzinga

 

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