Exela Technologies’ Stock Price Rallied 20.8%, Extending a 2-Day Move

Key points:
Exela Technologies’ stock price rallied 20.8%.
However, there was no immediate reason for the rally.
However, we could trace it back to last week’s news.
As a result, Exela stock looks pretty attractive.

The Exela Technologies Inc (NASDAQ: XELA) stock price rallied by 20.8%, extending a 2-day rally that saw it rise over 34.33% during yesterday’s trading session. Unfortunately, the company has not made any significant announcements this week. Hence, we have to examine other reasons for the current rally.

The last crucial announcement from Exela was on Wednesday last week when it announced that it had received a non-binding proposal to acquire one of its business units that generate up to $200 million in revenues.

Also read: Best Cheap Tech Stocks Under $10.

Furthermore, the business process automation company is negotiating with several counterparties regarding additional acquisition proposals. The rally in Exela stock is long overdue, given the significant nature of its Wednesday announcement.

Exela has a market valuation of $59.96 million, yet one of its business units generates approximately $200 million in revenues. Hence, there is an apparent mismatch between the company’s actual value and its stock market valuation. Typically, companies are valued at 3X their revenues, which would value Exela at $600 million based on that single business unit.

The tech company announced on June 6, 2022, that it was looking to sell some of its standalone businesses to maximise shareholder value. The acquisition proposal is a good reason the firm is keen to divest some of its assets.

The company said it is evaluating the proposal and other alternatives that may enhance shareholder value. The company’s deliberations align with its fiduciary duties, consulting its legal and financial advisors on the best course of action.

Exela clarified that there were no guarantees that it would reach a definitive agreement with any of its potential suits and that it has no obligation to provide further updates regarding any proposal unless required by law.

So, should you buy Exela stock? I would buy the stock given that it is trading at a significant discount, and any acquisitions will likely result in massive gains for shareholders.

*This is not investment advice.

Exela technologies stock price.