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Exela Technologies Inc. (XELA) has seen its stock price fall substantially over the past few years, leaving investors wondering if 2024 will finally be the year this business process automation company turns things around.

As a Xela stock owner or prospective investor, you likely have questions about what led to the steep drop in share price and whether better days could be ahead.

This detailed guide will give you insights into Exela’s financial standing, growth potential, and stock value drivers in 2024.

 

Exela Technologies Business Model and Operations

Exela Technologies specializes in business process automation solutions delivered through machine learning, robotic process automation, and leading-edge technologies.

Over 4,000 global customers across banking, healthcare, insurance, and other significant industries use the company’s cloud-enabled software and solutions.

The company has deployed over 15,000 employees to provide implementation, support, and strategic advisory services alongside its technology solutions.

Exela generates revenue through technology subscription fees and billing for transactional activities. The company has sought to grow through strategic acquisitions that expand its geographic reach and technology capabilities.

However, Exela has struggled with ballooning debt obligations, creating a cash compression. As you’ll see, addressing liquidity and stabilizing the balance sheet is critical to any meaningful stock rebound.

 

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3 Factors Behind Xela's Stock Price Decline

For those holding out hope of the shares reviving, understanding why investors fled is crucial.

 

Here are the principal factors precipitating the selloff include:

1. Massive Debt Burden

Exela’s aggressive acquisition strategy left it saddled with almost $1.15 billion in total debt as of Q4 2022 financial results. Servicing these borrowings consumed the revenue from operations over those 12 months. This alarming imbalance left investors extremely concerned over solvency risks.

2. Dilution from Equity Issuances

Exela’s weak balance sheet forced the company to issue substantial new shares to raise capital. The share count exploded, representing severe dilution. With the company struggling mightily, this dilution eroded justification for a higher stock price.

3. Disappointing Financial Performance

 

Financial report papers and a pen laid out on the table

 

Exela Technologies generated a revenue of $1.07 billion in the twelve months ending September 30, 2023, a decrease of 3.43% compared to the previous year. Meanwhile, in 2022, the company’s annual income was $1.08 billion, indicating a decline of 7.67% compared to the previous year.

These results created an increasingly gloomy long-term picture that prompted holders of Xela stock to sell in droves. Now, the question is whether 2024 could be the long-awaited inflexion point.

 

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Exela Technologies Value Drivers and Growth Outlook for 2024

Xela stock’s appraisal will point to management’s efforts to rectify the missteps that led to the stock’s epic crash. The company has targeted debt reduction, improved profit margins, and stabilization of cash flows as strategic imperatives.

But stabilizing finances is just step one. Reigniting meaningful revenue growth through expanding relationships with flagship customers and targeting key verticals is also required to change perceptions around long-term viability.

For 2024, analysts will assess various performance indicators as barometers for whether a credible turnaround is gathering momentum.

Among the most crucial value drivers to track are:

Debt Repayment Progress - Can management make headway in reducing the giant debt load through refinancing agreements and operating cash acceleration? The pace of deleveraging will signal if bankruptcy risks are receding.

Client Retention/Acquisition - Exela must achieve high customer retention to return revenue growth to positive territory, especially among financial services and healthcare payers. Client metrics will determine if the business can stabilize.

Gross Margin - With an average gross margin of 21.26%, Exela has room to improve profitability. It would boost investor confidence if executives enhanced utilization and reallocated resources to higher-margin service offerings.

As the year transpires, we’ll get greater clarity on whether Exela is making a tangible process addressing the above red flags. At this fragile point, though, execution risks remain exceptionally elevated.

 

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Is Exela Stock a Good Buy for 2024?

 

A man gestures towards a candlestick pattern, holding a mobile phone featuring buy and sell options

 

Given the steep valuation drop, some investors wonder if Xela stock now represents a unique bargain. To give you a hint, let’s review Xela’s recent share price performance in 2023.

Xela’s stock price has steadily declined over the past year. In January 2023, the share price hit a 12-month high of $19.74 before closing at $12.18. From that peak, the stock has trended downwards rather sharply.

By May 2023, Xela stock hit a closing price of just $5.15. Besides a brief recovery in July 2023, where prices temporarily bounced back above $6, the overall trajectory has been quite negative.

The downward momentum continued for the remainder of 2023, with Xela ending the year at a closing price of $3.36 in December. So far, in early January 2024, the stock has sunk further to close at $2.95.

The share prices in 2023 and early 2024 indicate an opportunity for an upward trajectory as soon as the company handles its crucial value drivers. However, if it is not, the Xela stock may give traders a hard time looking for a quick investment return.

 

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Conclusion

The Xela stock price has faced immense downward pressure due to the company's high debt load, equity dilution, and disappointing financial performance.

Though the low share price seems enticing for bargain-hunting traders, massive execution risks remain before Exela can stabilize its core business model.

Investors should continue monitoring the company's progress on key value drivers in 2024, such as debt repayment, customer retention, and profit margin improvements, before determining if a sustainable turnaround is underway.

Given the fragile financial state and the history of letdowns, traders must thoroughly research Exela's restructuring efforts before making investment decisions.

 

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“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”

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