$XELA Business Automation Play for NASDAQ:XELA by Penny_Stocks_Today

Exela Technologies , Inc. (NASDAQ: XELA ) is a leader in the business process automation niche where it utilizes its technology to provide digital transformation solutions for its customers. With the AI sector soaring recently, some investors are speculating XELA could be a sympathy play since business automation is at the core of its business. However, XELA stock forecast appears to be bearish in the long-term as the company could be heading for bankruptcy due to its mounting debt and declining sales. XELA also is facing the risk of being delisted from the NASDAQ due to its low PPS . With a hearing set for March 2 to determine the future of the company’s NASDAQ listing, XELA stock could be one to watch closely over the coming weeks for a dead cat bounce.

XELA Fundamentals

Exposure To The AI Sector

With OpenAI’s ChatGPT bot witnessing major success, the AI sector has been heating up thanks to its applications’ benefits for businesses. Given that business automation is at the core of the company’s operations, many investors are anticipating news from the company regarding ChatGPT integrations which could send XELA stock soaring. While the company has not shared any news regarding such integrations, XELA stock could be one to watch closely as it could be an AI sympathy play.

XBP Europe

Currently, XELA is preparing to spin off its European business – XBP Europe, Inc. – through a SPAC merger where XBP agreed to merge into CF Acquisition Corp. VIII (NASDAQ: CFFE). This spin-off values XBP at an enterprise value of $220 million and is expected to close in the first half of 2023. Upon the closure of this deal, the combined company will be called XBP Europe Holdings, Inc. and will be listed on the NASDAQ under the ticker XBP. While this spin-off reduces the value of the company, it could be pivotal for XELA’s long-term prospects since the company would now be able to address its debt situation more efficiently. This could be the case since XELA would not carry the XBP-related debt on its balance sheet .

NASDAQ Delisting

While the company affected a reverse split to maintain its NASDAQ listing recently, XELA is once again at risk of being delisted for not meeting the minimum bid price listing requirements. As a result, XELA was provided until April 10 to regain compliance with the listing requirement. However, XELA’s PPS continued its downward spiral with the stock currently trading near all-time lows below $.1. For this reason, the NASDAQ decided to delist XELA stock from the exchange.

On that note, XELA filed an appeal and a hearing date is set for March 2 to decide on the company’s future listing on the NASDAQ. With this in mind, many investors are watching XELA stock since the stock could witness a dead cat bounce in the lead-up to the hearing. Considering that the stock has been witnessing an extremely high trading volume this week, XELA could be a profitable buy in the short term.

Bankruptcy Risk

Given its high debt load, XELA could file for bankruptcy as its revenue growth continues to decline. On that note, XELA’s subsidiary – Exela Intermediate, LLC – failed to make the semi-annual interest payments under its 11.5% first-priority senior secured notes due 2026 and 10% first-priority senior secured notes due 2023. With Intermediate now in a 30-day grace period to make the interest payments, the subsidiary is in advanced talks with third parties to provide it with the required funds to make these payments. Since Intermediate’s efforts to seek funding may not be successful, the subsidiary could be on track to default on its debt which could be an alarming sign for XELA’s prospects.

XELA Financials

In its Q3 report, XELA reported $865.2 million in assets – a considerable decrease from $1 billion at the beginning of the year. With this in mind, XELA’s cash and cash equivalents declined from $20.7 million to $10.4 million. Meanwhile, XELA reduced its liabilities to $1.5 billion compared to $1.7 billion by reducing its long-term debt from $1 billion to $909.5 billion. Despite reducing its long-term debt, XELA remains in a weak financial position since its current liabilities of $516.6 million far outgain its cash on hand.

In terms of revenues, XELA reported a YOY decline from $279.2 million to $264 million. XELA also reported an operating loss of $47.4 million compared to an operating profit of $2.4 million a year ago. Based on this, XELA’s net loss widened significantly YOY to $85.2 million compared to $13.2 million last year. Given the company’s declining revenues and widening net losses, XELA could be an extremely risky investment as it could file for bankruptcy.

Technical Analysis

XELA stock price is currently at $.0573 near its support at $.0571. Meanwhile, XELA shows resistances near .0622, .0698, .10, and .1365. With the stock trading near all-time lows, XELA stock has the potential to run in the near term as a dead cat bounce could occur. Since the company is at a high risk of being delisted on March 2, XELA stock has the potential in the lead-up to its hearing considering its meme status among retail investors. For this reason, bullish investors could find a good entry at the current PPS in case the stock runs on high volume . With this in mind, XELA has been witnessing an extremely high trading volume this week – making the stock a prime candidate to run.

Since XELA is a risky investment as it could be delisted and a potential bankruptcy could be looming, accumulation is on a steep downward trend. Meanwhile, the MACD is bullish but appears to be approaching a crossover. The RSI dropped from 40 to 32 indicating that XELA is oversold at the moment. While the company faces substantial risks regarding its future, XELA’s cheap PPS could be an intriguing opportunity for a run in the short term.

XELA Forecast

Although XELA has a number of risks regarding its ability to continue operating, the stock presents an opportunity for short-term gains given its near-all-time low PPS . With the AI sector soaring, XELA could be a sympathy play to watch given that business automation is its main business. However, investors should be wary that XELA could be heading for bankruptcy given its mounting debt and low liquidity. Given that the company’s subsidiary entered the grace period for its interest payments, the XELA stock forecast could be bearish .

Meanwhile, investors are anticipating the results of XELA’s hearing on March 2 to determine the future of its NASDAQ listing. If the company is indeed delisted, there could be a high possibility for the company to file for bankruptcy since it would have less access to capital to pay off its mounting debt. Despite these detrimental risks, XELA stock could be one to watch closely for a dead cat bounce in anticipation of its NASDAQ hearing.