This shorting of NEA has intrigued me for some time. Now I have nothing against shorters when they see a fundamental weakness in what looks like an overpriced stock. However I could not see what attracted the shorters to NEA which to me appeared to be (and still does) a conservative well run business with excellent growth prospects. So I have been scratching my head ever since.
Now the excellent recent posts by
strangelogic,
SA1588and
leasx may have crystalised my thoughts. Like
SA1588 I read the AFR "churn" article and reacted similarly. I emailed the writer and tried to point out the flaw in the article. I agree with
SA1588 some of the shorters may have influenced the writer who should have known better.
Now NEA seemed to attract the shorters about the time it became the best performing stock in the ASX 200 at the end of FY 18/19 when you could understand why shorters could be drawn to it. The announcements over the next year or so could have been very profitable to smart shorters. I think this time the shorters got over confident and thought history would repeat itself and jumped in with out reading the report properly and got burnt over the next few days after the analysts decided the news was positive. Lets hope they will look for a more profitable plaything than NEA now.
Veecat the market clearly voted the report was good not bad, it just took them a few days to analyse it after the shorters drove it down.
Gillysrooms The company has indicated it is cash flow neutral now but has been coy about the future. I think it is leaving its options open but is behaving very cautiously given its response to COVID. It surely would like to expand into other regions, say UK, Europe and possibly Mexico in which case it probably would cash raise but I cannot see it doing it in the current environment. The key thing it seems to be in control and is very unlikely to have to do an 'involuntary' CR
My own opinions DYOR
