USA Technologies, Inc. (NASDAQ: USAT) plunge from record highs of $16 is a point of concern. Over the past two months, the stock has shed more than 70% in market value fuelling concerns about its long-term prospects.
USA Technologies Price Analysis
Reports that the company is staring at a potential delisting from the NASDAQ stock market is the catalyst fuelling the sell-off wave. The company has found itself at crossroads with the market-listing firm on failing to report financial results as required.
The stock was on an impressive run in the first half of the year that saw it breach key resistance levels on its way to record highs.Failure to post earnings results has all but continued to spook investors amidst growing concerns as to why the company is reluctant.
A change of sentiments in recent months has resulted in a steep sell-off that has left the stock staring at two-year lows. Given the strength of the downward pressure, the stock could continue plunging back to the IPO price.
After the recent sell-off, the stock is staring at a critical support level at the $4 a share level. This is the same level from where the stock embarked on a meteoric rise early last year to record highs. A breach of the critical support level could leave the stock vulnerable to further declines back to the $3 a share handle last registered in 2016.
USA Technologies needs to stabilize above the $4 a share level to avert a further slide to all-time lows. Any bounce back after recent sell-off would experience strong resistance at the $6 as are level. Above the $6 share level, bulls could come in and continue pushing the stock up.
Why is USA Technologies Imploding?
Investors sentiments on USA Technologies has hit all-time lows on the company failing to post financial results needed to gauge operational efficiencies and long-term prospects. The failure has already attracted the attention of the NASDAQ Stock Market LLC, which has already hit the company with a delisting notice.
The NASDAQ has given the company until March 12, 2019, to file its quarterly and full year financial results to avoid further repercussions. While the company is not at risk of losing its listing status, for now, a lack of financial results all but continues to spook investors depicted by recent price action activity.
USA Technologies on its defense says it has failed to file financial results because of an ongoing audit into certain contractual agreements.
“The investigation remains ongoing, and the Audit Committee is working closely with its advisors to complete its investigation in as timely a manner as possible. Once the investigation has been completed, the Company plans to file the Annual Report and the Quarterly Report as soon as practicable,” in a statement.
Separately, the company has entered into a second consent letter agreement with JPMorgan relating to a new credit agreement. The agreement also extends until December 31, 2018, the time for the delivery of the company’s audited financial results to the lender among other parties.
USA Technologies finds itself in a precarious position on failing to post quarterly and full year financial results. The failure has all but continued to fuel a sell-off of the stock after a phenomenon run early in the year.
As it stands, the stock looks set to remain under pressure until the company comes through on the delivery of financial results. Failure to post the results in time could result in a further plunge of the stock and could exacerbate the risk of the company losing its current credit line.