The Xerox (NYSE: XRX) stock price dropped as the company reported mixed results and guidance this week. It fell to $16.15, the lowest since November 2020 and 52% from its highest in 2019
Reasons for the Crash
Xerox holdings is a leading company that offers printing products to companies globally. In 2019, it gained popularity after its acquisition offer for HP, another printing provider.
Xerox is a smaller company compared to HP, which had a $34 value; thus, Xerox’s offer was striking. It aimed to build a larger printing company to compete with foreign companies. HP eventually refused the offer stating that it was undervalued and worried about Xerox’s financial situation. Xerox let go of the bid when Covid 19 Npandemic began.
Since then, Xerox’s stock price has dropped sharply, resulting in a $3 billion market cap. The sell-off went on this week after the company reported weak earnings. Its revenue decreased to $1.65 billion, with increased losses to 12 cents per share. The firm blames the current supply chain challenges for these losses, which impacted growth and margins.
Moreover, Xerox announced that it would keep its revenue guidance at $7.1 billion, lower than analysts’ predictions.
Many investors are fond of the company’s high dividend yield. It has a TTM yield of 7.47 and a forward yield of 5.97%. These yields are higher than average, yet the company faces debt challenges.
While it has a total market cap of $3 billion, the company has a total debt of $4.54 billion. Excluding cash, it has a net debt of $2.66 billion. Also, the company continues to face margin contraction and slow growth.
With a $3billion market cap, the firm’s debts total $4.54 billion. It has a $2.66 billion net debt minus cash. Moreover, it keeps facing margin contraction and slow growth.
Xerox stock price forecast
The daily chart shows that the XRX stock price has been in a bearish trend in the past few months. The stock managed to move below the important support at $17.21, which was the lowest level in 2021. It has crashed below the 25-day and 50-day moving averages. The MACD has moved below the neutral level. Therefore, the stock will likely continue falling as bears target the next key support at $15.