Elray Resources, Inc. (ELRA)
$ 0.0057 ▲0.0022 (62.86%)
Volume: 87,046,668
UPDATE: AFTER THE CLOSE
It fell apart as the day progressed. Clearly this was a pure pump. There is no news. There is volume created out of no where driving up the share price. Then there is far greater volume coming in to capture every (fraction of) a penny this stock is up. Ultimately this stock was essentially flat from Friday’s close to Monday’s close.
The closing stats Friday and Monday hide a very significant fact:
A whole lot of people TODAY immediately lost between 35% and 50% based on TODAY’S CLOSE. That’s if they had to sell at the close.
Why would this stock ever recover? Why would they not just move on to a reverse split in the not too distant future?
(The content below was published after I received a lot of early feedback in the trading day. Some thought that when ELRA started its upward momentum, we might have to “rethink our short call” on the stock. Of course we did not. We doubled down – and the close proves we were right. The content below was published about 90 minutes into the market day.)
It’s Up Massively – Short or no short?
We were asked if we are still recommending going short on ELRA despite today’s news and despite the stock being up sharply on huge volume?
Going short is a matter of how much tolerance you have for risk. If you need to cover right away, you likely cannot go short on a stock that is running. Very few people can go short on a non-reporting pink sheet stock. Mostly market makers and a few institutions are the only ones that can truly do it their accounts.
Calling a short on a non-reporting pink sheet stock really means we do not believe that it will hold the value, and eventually it will precipitously fall. There is no doubt that people who bought Thursday and Friday could make a huge gain right now. The issue is that we are likely playing “musical chairs” with this stock. Once the music stops, whoever is holding will likely see those short-term gains erased.
Today’s news:
I am not going to start my day by knocking a PR from ELRA. Playtech is one hell of a company. It means something when a small pink sheet stock names a multi-billion dollar company in its press release. The only question I would ask is this:
Upon reading this sentence in the release, are they suggesting that Elray is the ONLY reseller that will reach territories in Asia? What are the “defined territories” more precisely?
In terms of this agreement, Elray Gaming now has the rights to Resell and operate the Playtech Software in defined territories in Asia.
If they capture business in an exclusive and huge territory by definition that is currently NOT SERVED, this could be huge. If they are having to compete with other resellers that have prior relationships in the area, this is much ado about nothing.
Look at Elray’s revenues for their entire existence. They are clearly not building on that business, as there is so little past business to build upon. Elray has to build new relationships to be successful.
The Asian Sales Team?
Do they have an Asian sales team? If they don’t, then this is an even greater short at the new present value.
We’re still recommending short. While this may run on this news and other hype, we see this reversing not too long from now.