- XELA stock looks to continue upward trend.
- Exela Technologies introduces new AI-powered document processing software.
- XELA shares are two weeks into ascending parallel channel.
Update July 14: Exela Technologies (NASDAQ: XELA) has been extending its gains on Wednesday with yet another double-digit jump. At the time of writing, the Irving, Texas-based software firm has seen its share price hit $5, a 15% rise on the day. Zooming out, XELA has more than tripled since the rally began in late June. The price was under $1.50 back then. Investors seem excited by the new AI capabilities and technical traders also point to a bullish trend, as explained below.
Exela Technologies (NASDAQ: XELA) rose more than 9% in Tuesday’s premarket as investors believe there may be a repeat of Monday’s unexpected 19% surge when the market officially opens. Monday’s run-up to $3.47 was in response to the launch of a new artificial intelligence offering that is supposed to speed up document processing.
Exela is a business process corporation from Texas that boasts a client list from 50 countries, including 60% of the Fortune 100. Despite their large footprint, shareholders have not had much success. The company has lost more than $100 million every year since its IPO, and XELA shares have traded down from $30 in 2015 to less than a dollar last year. In January, management had to offer a reverse stock split – one share for every three – in order to remain listed on the Nasdaq. Revenue has trended down since.
Catchphrases like “artificial intelligence”, however, have a way of turning heads, and management seems to think this was the missing ingredient. The company says the new technology offering “enables the automation of document classification, data extraction and data routing” for the healthcare and government sectors. Additionally, Exela has a strategy to roll out the new platform to the financial services and legal sectors.
| Market Cap | $205 million |
| Price/Earnings | N/A |
| Price/Sales | 0.17 |
| Gross Margin | -0.5% |
| Net Margin | -16.7% |
| Sales Growth YoY | -19% |
| Earnings Growth YoY | -59% |
| Average Wall Street Rating and Price Target | $4 |
XELA shares have ridden the 9-day Simple Moving Average (SMA) perfectly since bottoming out in late June. At the time of writing, the 9-day SMA is perched at $2.65, which is near the bottom trend line of the new ascending channel. XELA stock has witnessed many extraordinary spikes over its six-year history. This includes the brief gap up in early March that saw trades as high as $7.82 before shares fell off a cliff and drifted back down into obscurity. Now that the stock is trading within an ascending trend channel, observers should expect that there is more upside on the horizon.
XELA stock has been drifting in and out of the overbought territory on the Relative Strength Index (RSI) since late June, so its current station at 71 probably means little. Since first entering overbought territory on June 29, the stock has climbed another 48% higher. After closing just above the high from January, the next target for bulls is the July 8 high of $3.87. Since the premarket trading has already seen a rally near that level, it seems likely that new entrants will seek to conquer the Autumn 2019 resistance at $4.23. Only then can traders target the March 9 close of $4.64 or the March 10 open of $6.08.
XELA 1-day chart
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