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Why did Exela collapse 50% in one week?

The stock plunged 46% last week, effectively slamming the brakes on a dazzling three-week rally.

  • Exela Technologies Inc (NASDAQ: XELA) share price closed 10% lower on Tuesday (20 July 2021)
  • The stock has collapsed 46% in the last one week, caused by a sell-down among riskier assets, including tech and cyclical stocks
  • Despite the slide, XELA’s market cap has skyrocketed 103% since late June 2021
  • Interested to trade Exela shares at a fraction of the cost? Open an account with us to get started today.

XELA stock price: What's the latest?

Exela Technologies shares collapsed 46% in the last one week, on the back of weakened market sentiments that caused investors to rotate out of riskier assets into more defensive plays like consumer staples, healthcare and utilities stocks.

On Friday (16 July 2021), the global business process automation company also announced the listing of option contracts on the NYSE Arca.

The sell-down among technology and cyclical stocks effectively put an end to Exela’s massive three-week rally run.

Major US indices ended the previous week in the red, with investors fixated on an uncertain economic outlook ahead, after the University of Michigan’s latest consumer sentiment and current conditions index readings came in lower than the previous month.

‘While the stance of inflation being “transitory” is still largely present among consumers, it seems that near-term price pressures may deter some consumers from spending, increasing the pressure for the Fed to address the issue of inflation being more persistent ahead,’ IG market strategist Yeap Jun Rong noted in a client on Monday (19 July 2021).

Yeap added that this comes along with risk factors, such as rising Covid-19 cases, which may lead to ‘some near-term profit-taking’ by investors who have largely priced in most of the market’s positive catalysts since the start of the year.

What caused Exela shares to escalate 103%?

As mentioned, the picture looks vastly different when zooming out to a monthly perspective. XELA’s share price has more than doubled in the last one month, dating back to 21 June 2021.

During this time period, the global business process automation solutions provider made a series of uplifting announcements.

First, on 30 June, the company said it completed its first at-the-market equity programme for US$100 million that was previously announced, as well as entered into a second at-the-market equity programme for an additional US$150 million.

A week later, Exela provided an update on the second programme, stating that it has significantly improved its liquidity position by raising US$85 million of proceeds.

The company plans to use certain proceeds from the equity programme to strategically reduce its debt (starting with an amount of US$25 million) and associated interest expense obligations, among other purposes.

Then on 12 July, Exela expanded its offering in AI-enabled automation in the business process automation space by launching a combination of Intelligent Document Processing with its robotic process automation platform, called EON.

In terms of investment rating, the stock currently has a rating of ‘buy’ and price target of US$4, according to the latest analyst sentiments published by MarketBeat.

The price target represents a 45.5% upside potential from XELA’s last traded price of US$2.75 on Tuesday (20 July).

What’s your take on XELA shares? Do you think they will fall or rise? Take your position today.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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