Expert: Digital Ally Investors Are 'Buying A Lottery Ticket'
Digital Ally, Inc. (NASDAQ: DGLY) was up more than 12 percent Thursday after North Charleston mayor Keith Summey said that the city will supply more body cameras for its officers.
The stock has fallen a couple points this afternoon, though it is still up more than 10 percent. Investors might be intrigued by the move, but Cody Willard, chairman of Scutify (a financial social network), thinks investors should approach with caution.
"We're talking about a company whose entire market cap is $60 million," Willard told Benzinga. "Apple does $60 million in an hour in sales. When they're this small, the question is, why is it even public?"
Willard said that investors should look at the company's share price over the last 12 months and "look at what happened every other time it spiked anywhere between 500 percent and 70 percent in the last year off of these types of headlines -- and see that it comes right back down."
"This is about the fifth time it has popped like this off of headlines," he said.
Related Link: GoPro Could Thwart Digital Ally's Growth Potential
Playing The Lotto
Willard stressed the enormous risk in purchasing shares of Digital Ally.
"You're buying a lottery ticket," he said. "I don't care how many headlines out there are about people wearing wearables, about law enforcement embracing wearable camera technology. That has nothing to do with Digital Ally. These guys are a tiny player. They don't have distribution. They have a few products. We don't know how good they are."
Consumers won't find the products at Best Buy Co Inc (NYSE: BBY), Willard noted.
"It's not like you see cops in your town wearing any Digital Ally stuff," he added. "You're just speculating on headlines."
Willard follows the wearables space but said that Digital Ally "isn't even on my radar, except watching it pop and pressed over and over and probably insider manipulated."
"Why is a $60 million even public?" Willard questioned. "This company was worth $20 million a year ago. Benzinga is worth more than Digital Ally and it's not public."
Production Problems
Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, said that it is much easier for an Internet-based company to come up with something viral if the product isn't much more than computer code.
"These guys actually have to make a product," Udall told Benzinga, referring to Digital Ally. "They have to make it, do testing of it. The products have to be durable and field-tested and all that stuff. And they have to offer warranties. Those kinds of companies, it's tougher for them to become large. I'm not saying it's right or wrong, that's just the way it is right now."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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