Stock for Alfi, Inc. (NASDAQ: ALF) has been on a downward roll, to the dismay of traders holding long positions. After a 6.2% tumble on Friday, ALF stock further plummeted a further 7.5% in the afterhours, over the weekend. The sharp drop in price comes after a persistent bullish trend since last Tuesday, of over 15%. The sudden shift in market perception came about as a result of a recent announcement put forth by Alfi’s management. The news, coming in on Saturday, had triggered a weekend spiral for the software company, which persists today.
Alfi Disposal of Miami Condominium
Alfi Inc announced on Saturday, its intention to dispose off its Miami condominium in order to address serious liquidity constraints. The press released raise serious red flags across the market as to the prospects and sustainability for ALF stock. The management further pointed out to the “nominal” revenue it generates through customers, which is insufficient to finance its expansion. It further discussed plans of acquiring funds through both debt and equity modes of financing. This further brings about the threat of stock dilution, further pushing investors to sell off ALF stock.
These revelations come as alarming for investors that held on to the company’s earlier mentioned ambitions and initiatives. Having to sell of assets in order to sustain operations points towards an imminent risk of bankruptcy.
Earlier Growth Initiatives
The prior growth trend last week came about following announcements of innovative projects raising significant optimism. These included advertisement campaigns that made use of QR codes, as well as employing tablets in rideshare vehicles in Las Vegas and Austin. These had gone on to push a growth trend that had continued until Saturday in the after-hours of trade. The optimism was shattered after the liquidity scare had surfaced, putting the growth initiatives under serious skepticism. Market perception towards Alf Inc clearly pointed it to be a company focused on its immediate survival, rather than further growth.
Conclusion
Perception towards ALF had jolted towards a panic after revelations on Thursday surrounding the company’s liquidity crisis. Having to sell its condominium stresses the urgency faced, as well as plans to acquire debt and equity funding. This tumble is likely to continue until the liquidity crisis sees resolution, and financial sustainability reemerges.
