Speed Commerce, Inc. (NASDAQ:SPDC) Surged From the Bottom in an Upward Correction
[[tagnumber 0]]Shares of Speed Commerce, Inc. (NASDAQ:SPDC) tumbled to at least a five–year bottom within just a few sessions last week after the company released its third quarter report. The numbers in it suggested the company is running fast out of cash and could even need to sell out the business very soon, while the new shorting activity this week also does not suggest the stock could recover.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 3]][[tagnumber 1]] [[tagnumber 0]]SPDC closed yesterday at $0.125 for a share, which is a nearly 67% gain from the previous close. The trading volume was far above the average but still not a record for the stock. Though this huge jump, SPDC share price could not break a resistance throughout the entire session yesterday, thus the chart does not look like there could be a rally for the stock.[[tagnumber 1]] [[tagnumber 0]]At the end of September, SPDC announced it had extended its contract with the Yankee Candle Company by another five years. That was not of any importance though as the latest quarter report shows the company is in a very bad financial condition and is still making huge losses each quarter. The net loss was almost $26 million compared to $1.62 in the previous quarter.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 10]][[tagnumber 1]] [[tagnumber 0]]Even worse are the negative operating cash flows which are not improving, which means that SPDC will further rely on debt and equity financing to cover its need for cash. The working capital gap increased by $100 million in the third quarter after some portion of the debt became due within the current three months. Moreover, an amendment of the terms included a covenant that the company enters into an agreement to sell all of its business by the end of the year if it does not make the required payments to the creditors.[[tagnumber 1]] [[tagnumber 0]]During the last two quarters, SPDC issued over 9 million shares of convertible preferred stock. Another 13 million shares of common stock were issued in an equity and warrants offering that raised $6.8 million in April, however, by the end of September the company had only $2 million in its cash account.[[tagnumber 1]] [[tagnumber 16]] [[tagnumber 1]]
