I’ve posted previously about the short squeeze we should see soon in SPCB. That has mostly to do with the massive short interest that MM algos have built up since the pop on great fundamental news, on Friday. (35m shares shorted Friday in a name with ~14m share float). As longs soak and accumulate shares, potential for huge squeeze over $3 increases. All that would need is a further catalyst to spark the fire…
NEW DD: That catalyst is likely looming in the form of an update, from either SuperCom or the Israeli government, on the actual size of the contract as a result of usage. The contract pays on a unit/ day basis, so expanded usage leads to expanded revenue. The estimate was for a $3M/ month contract for 3 months, with the option to extend to 36 months. This $3M revenue figure is likely based on a 10k unit number, sighted by both the Israeli Government, SuperCom and multiple news sources. These 10k units have already shipped, with 20k more ready to go. Should this scale up toward the 30K units that SPCB has produced for use by the Government as part of this program, monthly revenue could be closer to $9M (market cap is only $30M!!).
The reason to believe that the order may quickly be increased from 10k units has to do with the immediate travel demand seen in Israel since restrictions were lifted on Sunday. The government raised the cap on travelers going through Ben Gurion Airport to 8,000 per day. On Sunday, 9,000 people passed through the airport, already above expected demand. Bookings on travel sites and the removal of travel restrictions from Egypt, Greece and Cyprus point to further bullishness in Israeli travel, and therefore Israeli quarantine.
So far the travel restrictions have only been lifted for travelers with an Israeli passport. Once Israel moves forward with a plan for reopening foriegn tourism- a major economic driver and an issue hotly debated leading up to Tuesday’s PM election- the quarantine bracelet program could be expanded as a solution for opening the country to foriegn travelers who were vaccinated outside of Israel.
Additionally, should new variants prove resistant to the Pfizer vaccine, as some have, Israel could expand home quarantine measures, using the bracelet method in favor of the costly Government run quarantine hotels, that were used heavily during the first wave.
All told, SPCB is undervalued at the given contract rate. With increased units leased and a renewal beyond 3 months, the company would be EXTREMELY undervalued. And I believe update should come soon, given the drivers listed above.
Excerpts and sources below:
“On Wednesday, the Knesset gave final approval to a bill requiring those returning to Israel to self-isolate at home with an electronic bracelet or other technological means. According to the bill, those who refuse to wear a bracelet, or are unable to isolate themselves at home, will be required to stay at one of the government-run quarantine hotels as an alternative. Travelers carrying documentation showing they are fully vaccinated in Israel and those who have recovered from the virus can skip quarantine, provided they take a virus test just before the flight and on arrival in the country, and that both tests come back negative. Those who have been vaccinated abroad must initially enter quarantine but may be released after a test showing they have antibodies, in addition to the two virus tests.”
“11:45 A.M. Israel approves digital surveillance of all arrivals during quarantine The Israeli Knesset passed a bill Wednesday allowing digital surveillance of all arrivals to Israel who are mandated to enter coronavirus quarantine. Arrivals to Israel who are sent to quarantine in their homes will be equipped with digital tracking bracelets or other digital tracking means, including through cell phones.
The law limits the use of the surveillance data to purposes of enforcement alone and the data can be saved for up to a month. Anyone who refuses the digital surveillance will be required to enter a state-run quarantine facility. The law also stipulates that information will be destroyed in real-time, as long as no violations occur. In the case of a breach, the data will be passed on to the relevant authorities. While the Health Ministry will be permitted to contact technological companies to produce additional means of digital surveillance, this will be limited to measures which do not “collect information beyond what is necessary.”
At a Constitution Committee meeting on Thursday, Deputy Health Minister Yoav Kisch estimated that 5,000 digital bracelets will be available for use from this week, and that the around 30,000 more will be acquired over the next three months. (Jonathan Lis)”
“The Israeli Knesset has handed the government powers to force all citizens returning to the country to wear a tracking device during their mandatory Covid-19 quarantine, or else be stowed away in a military-run isolation hotel.
Lawmakers passed a bill on Wednesday allowing authorities to mandate the so-called ‘freedom bracelets’ for citizens, after a previous measure requiring quarantine at government-administered hotels expired earlier this month. Now, Israelis will isolate at home by default, so long as they consent to wear the electronic tracking gadget.
Proposed last week, the new law makes exemptions for children under the age of 14 and allows residents to request a waiver from a special committee. Those who decline to wear the bracelet will be required to undergo isolation in one of the quarantine hotels, which will continue to operate. Violators of the isolation rules could be fined up to 5,000 Israeli shekels ($1,500).”