Giga-tronics Incorporated (NASDAQ:GIGA) Secures a New Loan but the Shares Tank
[[tagnumber 0]] [[tagnumber 1]] [[tagnumber 2]]Yesterday the shares of Giga–tronics Incorporated (NASDAQ:GIGA) closed in market consolidation, however, the stock keeps loosing value after the company announced firstly its annual financial results. The initial hype in May seems now too exaggerated and GIGA could be a good shorting opp[[tagnumber 3]]ortunity this week.[[tagnumber 1]] [[tagnumber 2]] [[tagnumber 1]] [[tagnumber 2]]GIGA closed the last session at $1.82 with a small loss from the previous close and trading volume near the average. Technically, the chart looks bearish for today as the stock price has broken further down below the 10–day moving average which served as a level of support earlier this month.[[tagnumber 1]] [[tagnumber 2]]Despite the huge drop in price and the low market cap, the stock still seems overvalued relative to the company‘s shareholders‘ equity which is near the critical level required for continued listing on the NASDAQ. For the last fiscal year, GIGA showed improvement in sales, however, it still relies heavily on debt financing to cover its operations, which is negative for the stock on the long term.[[tagnumber 1]] [[tagnumber 2]] [[tagnumber 12]][[tagnumber 1]] [[tagnumber 2]]The company‘s products have applications in defense electronics and wireless communications. It operates in two segments: Giga–tronics Division and Microsource, both of which have equal contribution to revenue. Total sales grew 39% in the last fiscal year and operating income increased significantly as well, yet interest expenses are growing and operating cashflow stays negative.[[tagnumber 1]] [[tagnumber 2]] [[tagnumber 1]] [[tagnumber 2]]At the beginning of the month, GIGA entered into a new revolving line of credit to replace the old one which had expired. The borrowing capacity is $2.5 million, interest is due monthly while the loan matures in May next year.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]]