Short interest in Evolution, a crowded Swedish gaming stock, has 12.8% of float short; since July 1, short interest has risen 8% and the stock has gained 25%.

This reflects a reversal strategy (shorting into strength, covering in weakness) which drives squeeze risk. Shorts cite regulatory, growth, and legal risks.

Crowded score rose from 60 to 70 with higher short interest. Squeeze score is 100 on a MTD return of 14%. Active long interest tracked price and now leads it.

Evolution AB is a leading developer and provider of live casino systems, powering online games like roulette and blackjack.

The share price has rebounded from recent lows due to resilient underlying cash generation, positive technical momentum breakouts, and easing near-term market pessimism surrounding upcoming earnings catalysts.

Candle Lake crossed the 30% ownership threshold in late July, lifting the stock, and its SEK 695 cash offer was rejected by the board on 24 August with the shares 18% above the offer.

The stock is crowded, with historical baseline short interest at 11% of float.

In lockstep, short interest has risen 8% since the start of July while the stock has gained 25%. Short interest and the stock price have moved together for most of the year, and more so recently.

This means the market is following a reversal strategy, shorting on the way up and covering (buying) on the way down. This is also a range or valuation strategy.

This causes squeeze conditions on the way up with rising stock prices and rising short interest, maximizing mark-to-market losses.

Short sellers have targeted the stock due to regulatory risks in international markets, fears of slowing top-line growth rates, and structural legal complexities tied to cross-border online gambling operations.

The crowded score has been relatively constant but has ticked up slightly with higher short interest. It is now 70, up from 60.

The squeeze score oscillates around the crowded score, as short investors lose money when the stock rallies. It is now 100, as the MTD return is 14%.

Active long interest tracks the price, with investors either following the momentum or leading the stock. Earlier in the year, the two moved together, but now it looks like long interest is leading.

Both long and short interest are near highs as the stock rallies, showing greater conviction on both sides.

In May, when long interest fell, the stock was a battleground name, with the Long/Short Ratio at 1.12 and 1.18. Before and after that period, however, the ratio was above 1.3, with the longs larger, and the stock was not a battleground name.

Want to know more? Access this data in real time using S3’s BLACK APP & BLACK MAP

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.