In the world of tech stocks, Exela Technologies (NASDAQ:XELA) has become a hot ticket in recent days. Indeed, growth investors have been gravitating toward XELA stock for a number of reasons. And today’s move higher of more than 20% in XELA stock is indicative of strong investor demand.
As a company providing transaction processing services, enterprise information and document management, as well as other various digital business process services globally, Exela’s business is one which growth investors inherently like. However, it appears other factors have been at play with XELA stock of late. These catalysts have taken XELA stock on a rapid ascent higher. In fact, XELA stock has approximately tripled from June lows at the time of writing.
One of the key catalysts for this recent run has been outsized retail investor interest in this stock. Indeed, Exela is a retail short-squeeze candidate that has become a favorite among Reddit investors. The company’s short interest ratio of 28% is high. Additionally, with a 66% short borrow fee rate, it’s costing short-sellers a lot of money to bet against XELA stock. For retail investors, short-sellers’ losses are (hopefully) their gains.
Let’s dive into a couple of the catalysts retail investors are looking at with Exela right now.
XELA Stock Soaring on Two Key Announcements
Exela announced today the company is expanding its AI-enabled automation via its robotic process automation platform. According to the company, “this industry-leading automation solution is deployed in the healthcare and public sector and further cements Exela as one of the leaders in the industry.”
Indeed, any sort of scalable technological advantage is likely to be looked upon favorably by investors. Such is the case with this announcement. The company’s intelligent document processing platform levers machine learning and AI technologies. These are key drivers which long-term growth investors look for in small-cap stocks. And should Exela execute perfectly on its growth strategy, this expanded platform could provide big upside over the long term.
Additionally, Exela announced last week that the company’s cash position has grown a lot stronger. The company notes its cash and cash equivalents have been boosted to more than $205 million. For a company with a market capitalization of around $210 million at the time of writing, investors are getting shares for roughly the gross cash position of the company. That’s not bad.
Exela also commented on its path to deleveraging. As a result of an at-the-market equity program launched this year, Exela plans to reduce its debt substantially in the near term. This deleveraging should reduce the company’s annual interest expense by $25 million, providing improved growth opportunities over the long term. For investors in XELA stock, this is certainly music to the ears.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.