The conceptĭrive Shack’s concept is great it operates a handful of enormous, outdoor, modern golf facilities that drive revenue from alcohol and food sales, as well as bay rentals. These are not signs of a sustainable rally, and I am still bearish on Drive Shack for these reasons, and the fundamental reasons we’ll discuss below. Second, the PPO, which is my favorite momentum indicator, flashed a sell signal in mid-December and is trending very strongly downward. This indicator isn’t perfect, but it is generally a good gauge of whether institutions are buying a stock, which is needed for it to sustain a move higher. The Accumulation/Distribution line – which measures rally strength via buying during the trading session – has done nothing but go down for the past year. The massive rally that saw the stock nearly triple from November to December has ended in spectacular fashion, and it appears to me the rally was weak. The company is in dire financial straits, it produces losses quarter after quarter, its supposed savior – Puttery – is as yet completely unproven, and we simply don’t know the fate of entertainment venues post-COVID. I said back in August that I thought Drive Shack had a decent chance of not surviving the crisis, and I still believe that.
Pure entertainment venues like Drive Shack ( DS) suffered immensely, and while shares have recovered in a big way in recent months, I think Drive Shack’s recent rally is a chance to sell. The initial closures were obvious headwinds, but even after that, increased operating expenses, reduced capacity, and reduced demand were all counted as barriers to normality. Entertainment venues were decimated in 2020.
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