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CYXT Stock – A Bankruptcy Play

CYXT Stock

After it filed for Chapter 11 earlier this month and got delisted from Nasdaq, Cyxtera Technologies, Inc. (OTC: CYXTQ), received six letters of intent to acquire the company, which can be beneficial for CYXTQ since it was seeking to find a buyer or a new investor. Given the high interest in acquiring the company, CYXTQ stock could soar until the final bids deadline on July 19.

CYXT Stock News

Filing For Bankruptcy

Together with its lenders, CYXT determined that filing for Chapter 11 was the best option for both the company and its shareholders. Following this news, CYXT stock plummeted to an all-time low of $.0578. To continue its operations during the Chapter 11 process, CYXT received a $200 million commitment from certain term lenders to assist with ongoing operations and meet existing customer demands. It’s also worth noting that CYXT has been granted court permission to access up to $54 million of the $200 million and to continue paying its vendors and suppliers after the filing date.

Dead Cat Bounce

Bankruptcy plays are popular among investors with several stocks previously experiencing dead cat bounces after their stocks plummeted as a result of filing for bankruptcy. During COVID-19 in 2020, multiple bankrupt firms’ stocks went on 50% runs, and earlier this year, Bed Bath & Beyond (OTC: BBBYQ) went on a 175% run after reaching an all-time low of $0.05. In a similar fashion to Bed Bath & Beyond stock, CYXT stock may experience a dead cat bounce after starting its Chapter 11 proceedings.

*Updated June 20th, 2023

Bidding War?

CYXTQ was in talks with 75 parties and successfully executed 37 non-disclosure agreements with potential investors. In addition, CYXTQ also received six letters of intent from potential investors which may indicate that it still has a lot of value to offer. That could mean that CYXTQ stock could run on further news regarding the potential sale.

At the moment CYXTQ hasn’t disclosed which companies have submitted letters of intent. However, CYXTQ has outlined that it has to choose a stalking Horse Bidder by July 16 and the final bids will be submitted by July 19, with the final results confirmed by the court no later than September 22, all will be huge catalysts for CYXTQ stock.

CYXT Stock Financials

In its Q1 2023 report, CYXT’s assets decreased 10% QoQ from $3 billion to $2.7 billion, while its cash and cash equivalents decreased 5% QoQ from $65 million to $62 million. CYXTs total liabilities slightly increased by 1% QoQ from $2.67 billion to $2.7 billion. 

Revenue also increased 7% YoY from $182 million to $196 million. Operating costs increased more than 150% from $193 million to $488 million, which contributed to the operating income/loss increase of 2800% YoY from $10 million to $291 million.  which amounted to a net loss of $325 million – a 692% increase YoY.

Media Sentiment

@KeepRealistic is bullish on the bidding war to acquire CYXTQ.

@Backstabbed14 will keep on holding CYXTQ stock.

Technical Analysis

CYXT stock chart

CYXTQ stock’s trend is neutral with the stock trading in a sideways channel between $0.0212 and $0.0455. Looking at the indicators, the stock is trading below the 200 and 50 MAs which are bearish indications, and is currently testing the 21 MA as a resistance. Meanwhile, the RSI is neutral at 50 and the MACD is bullish. 

It is also worth noting that there’s a gap near $0.064 that may be filled in the future if the stock continues witnessing strong momentum thanks to the high interest in acquiring the company.

CYXT stock chart

As for the fundamentals, CYXTQ stock just witnessed two catalysts in filing for Chapter 11 and getting delisted from Nasdaq. The submission of the final bids and the court decision regarding the potential buyout of CYXTQ will be major catalysts for CYXTQ as the stock could soar on any new developments.

CYXT Stock Forecast

CYXTQ is currently going through a pivotal period, with at least six parties considering acquiring it, and the number of bidders may also increase in the future, implying that CYXTQ may still have a lot of value to offer. It is certainly worth keeping an eye on CYXTQ stock and the entire process the company is going through at the moment.

If you have questions about CYXT stock and where it could be heading next feel free to reach out to us in our free alerts room!


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