Digital Ally, Inc., TASER International, Inc. Stun Short Sellers

Digital Ally, Inc. (NASDAQ:DGLY) and rival TASER International, Inc. (NASDAQ:TASR) are both popping today

by Josh Selway

Published on Dec 10, 2015 at 3:04 PM

Digital Ally, Inc. (NASDAQ:DGLY) has exploded 9.7% today to trade at $5.09, following news that regulators have rejected rival TASER International, Inc.'s (NASDAQ:TASR) patent challenge. While shareholders are in heaven, there's at least one group of traders that can't be happy about this development. 

Over the last reporting period, short interest on DGLY surged by almost 19%. Now, over 21% of the stock's float is sold short. At normal daily volumes, it would take bears roughly one week to repurchase their bets. 

On the other hand, analysts have a much more bullish outlook. Three-fourths of covering brokerage firms say the shares are a "strong buy." What's more, the equity's average 12-month price target stands at $17 -- more than three times current levels. 

Considering Digital Ally, Inc.'s (NASDAQ:DGLY) technical performance this year, this optimism doesn't seem well founded. Year-to-date, DGLY has dropped two-thirds of its value. 

Interestingly, TASR is also moving higher, as the company announced several orders for its Axon body cameras. The shares have gained 7.1% to hit $17.80, but like DGLY, they've underperformed in the long term. Specifically, the stock has dropped nearly one-third of its value in 2015. 

Technical difficulties aren't the only thing TASER International, Inc. (NASDAQ:TASR) shares with its sector peer. It, too, has been a favorite of short sellers, with almost 24% of the equity's float sold short. It would take over six sessions to buy back all these bets, at normal daily volumes. 

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