Exela Technologies’ (NASDAQ:XELA) financial problems have become unmanageable, and despite the company’s efforts to cut costs and obtain new funding, XELA stock is unlikely to recover. The company is unprofitable and is adding to its debt burden. The proposed reverse stock split is only a temporary solution to the prolonged issue of XELA stock’s value plummeting, and it won’t address the underlying financial problems that the company is facing. Prospective investors should consider other AI or technology companies that are financially stable and have good growth prospects.
Exela Technologies’ Financial Problems: Why XELA Stock is Not a Good Investment in 2023
Exela Technologies’ (NASDAQ:XELA) financial situation has become unmanageable, and despite the company’s efforts to cut costs and obtain new funding, XELA stock is unlikely to recover. Exela Technologies specializes in business process automation (BPA), a promising industry, but it can’t prosper if it continues to accumulate debt.
Cost-Cutting and New Funding Won’t Help
Exela Technologies is implementing cost-reduction measures, such as “headcount optimization” and “real estate reduction,” to achieve savings of $65 million to $75 million this year. However, these tactics will probably be too little, too late for the company, and will likely be difficult to implement.
Additionally, Exela Technologies recently disclosed $51 million worth of new funding from a “new securitization facility,” which will have to be paid back with interest. While this may provide a quick capital influx, it’s not free money, and it adds to the company’s already substantial debt load.
XELA Stock Investors Have Numerous Problems to Worry About
Exela Technologies’ most recently published Form 10-Q revealed that the company has approximately $1.1 billion worth of total debt, making new funding and cost-cutting efforts insufficient to make a significant difference.
Why Investors Should Stay Away from XELA Stock
Despite being part of a promising industry, Exela Technologies’ financial problems have become unmanageable. Thus, cautious investors should think about staying away from XELA stock this year. Hope isn’t a viable investment strategy, and while some traders may hope for a miraculous recovery, the reality is that XELA stock is likely to continue losing value.
Exela Technologies’ Proposed Reverse Stock Split: A Quick Fix to a Prolonged Issue
Exela Technologies (NASDAQ:XELA) has received multiple noncompliance notices from the Nasdaq exchange due to XELA stock closing below $1 for an extended period. To avoid being delisted, Exela Technologies proposed a reverse stock split at a ratio between 1-for-100 to 1-for-200. However, this proposed reverse share split won’t address the underlying financial problems that the company is facing, and it could be perceived as a sign of desperation.
XELA Stock is in Trouble
Exela Technologies is unprofitable and is adding to its debt burden. The company’s efforts to reduce costs might not be sufficient to solve Exela’s financial issues. Moreover, the proposed reverse stock split is only a temporary solution to the prolonged issue of XELA stock’s value plummeting.
What You Can Do Now
Investors looking for technology businesses to invest in should keep an eye on other options. While Exela Technologies specializes in business process automation, the company’s current financial situation makes it a risky investment. Prospective investors should consider other AI or technology companies that are financially stable and have good growth prospects.
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