Exela Technologies (NASDAQ: XELA) stock price more than doubled on Tuesday as investors focused on the recent reverse split. The shares jumped to a high of $7.83, the highest point since April 25. It has jumped by more than 123% from the lowest level this year.
What is Exela Technologies?
Exela Technologies stock price jumped even as concerns about the company’s viability increased. The company provides business process automation services to companies in industries like banking and finance, consumer and retail, insurance, education, and healthcare among others.
Exela Technologies provides its solutions in two segments: Digital Now and Smart Office. Digital Now. It serves some of the biggest companies in the world in virtually all industries like finance and retail.
The most recent results showed that the company’s revenue jumped to over $273.6 million in the first quarter. Its gross profit came in at $57.1 million while the adjusted EBITDA came in at $34.7 million.
Exela Technologies’ revenue growth has been falling in the past few years. Its total revenue has crashed from over $1.58 billion in 2018 to over $1 billion in 2022. Further, its losses have also jumped, with the net loss rising from $169 million in 2018 to over $415 million in 2022. As a result, cash burn has continued rising.
Its balance sheet has also worsened. Total cash has crashed from over $68.9 million in 2020 to $9.9 million in the last report. Its total debt has jumped to more than $953 million.
Therefore, there is a likelihood that the company’s situation will continue to worsen in the next few years. Besides, Exela is a low-margin, labor-intensive, and high leveraged company.
Exela Technologies stock forecast
Turning to the daily chart, we see that the XELA share price has been in a strong bearish trend in the past few months. The shares have plunged by almost 100% from the highest level on record. At the same time, the Average True Range (ATR) has dropped, signaling that its volatility has dropped.
Therefore, the Exela Technologies stock price will continue falling in the near term as sellers target the key supprt at $5, which is about 20% below the current level. In the near term, however, the shares could bounce back since it has formed a bullish engulfing pattern. In price action analysis, this pattern is usually a bullish sign.
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