A lot of people can agree that roller-coaster rides are really fun. Waiting for hours in the sweltering heat while waiting for some teenager to load you into a rickety cart isn’t ideal, but the thrill of the drop keeps people coming back.
Of course, roller-coaster rides are a little less fun on the stock market. Ideally, the stocks in our portfolio would consistently climb upwards. Sometimes, however, we run into a stock that tests our resilience with its insistent need to go up and down.
Last week, the market found its latest roller-coaster stock: SAExploration Holdings SAEX. Based in Calgary, Alberta, SAExploration is an oilfield services company that offers seismic data acquisition and logistical support for the energy industry in complex environments throughout the world.
SAExploration currently employs more than 2,000 workers in ten countries around the globe. The company provides 2D, 3D, and 4D seismic data services, as well as surveying, program design, data acquisition, process, camp services, catering, environmental assessment, and community relations.
Investors probably first noticed SAEX last week when the stock popped over 400% during midday trading Thursday. Shares closed at $9.20 on Wednesday afternoon, and by Thursday at 1 p.m., the stock was trading at $47 per share. SAEX would eventually peak at $50.47 per share on Friday morning.
As I described earlier, however, SAEX is the latest roller-coaster stock. Investors that held shares of the company over the weekend woke up today to find that SAExploration dropped significantly. In morning trading Monday, shares of SAEX fell over 45% to $18.05.
Worth Buying Still?
If you got in and cashed out for a nice profit last week, congratulations. However, there are plenty of investors left wondering whether this roller-coaster has another hill or not. Some thrill rides hook you with one big drop, while others seem to last forever.
First we need to look at what made the stock pop in the first place. Investors last week were reacting to SAExploration’s latest earnings report. The company reported earnings of $1.97 per share on revenue of $57 million. While both of those figures were down from the comparable quarter, investors were more excited about a couple of other key figures in the report.
SAExploration saw sales from projects increase 1.6% to $49.2 million, and gross margin also grew to 36% from 31.4% in the same quarter last year. The company also reported that it had successfully completed a restructuring and recapitalization of its balance sheet. SAExploration said that it successfully streamlined its product platform and secured funds necessary to recapitalize and meet its needs until certain tax credits kick in.
“These transactions provide SAE with enhanced liquidity, financial flexibility and a realigned balance sheet, which will make us even more competitive in the current environment and position us for long-term growth and continued success,” said CEO Jeff Hastings.
SAExploration has also seen some activity from activist firms, with BlueMountain Capital disclosing a 26% stake in the company on Monday. Oftentimes, announcements like this precede additional news, but it’s unclear what BlueMontain has planned for SAExploration as of right now.
At the end of the day, there is a lot of uncertainty surrounding SAExploration. Not only is the broader energy sector extremely volatile right now, but shares of SAEX have proven to be unpredictable over the past week or so.
If you enjoy roller-coasters, perhaps SAEX is worth the ride, and a refined and rebalanced financial situation certainly is a good sign for the company. However, there isn’t a ton of certainty surrounding the future of the stock, and many investors will feel inclined to avoid it for now.
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