In 2021, a grassroots movement has emerged and low-priced stocks are being targeted – but not necessarily in a bad way. If anything, the attention surrounding meme stocks has only helped to boost their prices and shine the spotlight on under-the-radar businesses.

A prime example of this would be Exela (XELA) stock, which has seen unusual trading volume and price action recently.

There’s an old saying in the financial markets: know what you own. Therefore, we’ll delve into what Exela does and what makes this small-cap company special – but first, a glance at the wild price moves of XELA stock. (See Exela stock charts on TipRanks)

A Quick Look at XELA Stock

At the end of 2020, XELA stock was calmly trading in a range between $1 and $1.50. The investing community wasn’t paying much attention to Exela – but that would change very soon. After wiggling and wobbling around for a couple of months, XELA stock suddenly shot up to $4.61 in March of 2021.

This moon shot wasn’t precipitated by any news-based catalysts. However, there’s another possible explanation for the unexpected price move, which will be outlined below.

That rally didn’t last forever, as XELA stock declined over the next few months. By mid-June, it was back down to $1.32. The next thing you know, the stock embarked on another rocket ride in July. As of July 14, XELA stock was already up to $4.47 and it was, once again, attracting a lot of attention.

Obviously, this stock is a fast mover and prone to fits of volatility. Therefore, it’s only appropriate for small position sizes. Still, if you like the company, then you might want to climb aboard for what’s likely to be a wild ride.

Exela – Leveraging Machine Learning

Before we attempt to figure out why XELA stock is moving so quickly, it’s important to understand exactly what the company does.

To put it simply, Exela specializes in tech-enhanced business process automation (BPA). The company has an impressive track record: 30+ years of experience in BPA, 4,000 global customers across 14 industry verticals, and 60+ Fortune 100 companies partnering with Exela.

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Thus, while XELA stock might be considered a small-cap stock, Exela’s global footprint is more extensive than you might have expected. The company's cloud-enhanced solutions span essential niche markets including information management, workflow automation, and integrated communications.

Therefore, the company can help businesses with a wide range of tasks: finance and accounting, human capital management, and legal management, among others. Additionally, Exela provides industry-specific solutions for the banking, healthcare, insurance, and public sectors.

Adding to its offerings, Exela recently expanded its artificial intelligence (AI) enhanced automation offerings in the BPA space. Reportedly, using the company’s Intelligent Document Processing (IDP) combined with its robotic process automation platform (EON), Exela is leveraging machine learning-based classifiers to augment document processing automation in the healthcare and public sectors.

Moreover, Exela has plans to ramp up projects in the finance and legal sectors soon, potentially with AI-enabled functionalities.

Short Squeeze Possibilities

The long list of Exela's capabilities show that investors could choose to own shares of XELA stock simply because Exela is a globally recognized BPA leader. Yet, a discussion of XELA stock wouldn’t be complete without also addressing the meme stock phenomenon.

Some folks would prefer to trade the stock on a short-term basis, rather than consider a long-term investment. In that case, the company’s business model might not matter as much. On July 14, XELA stock had a short volume ratio of nearly 31%. When such a large portion of a stock’s trading volume is held in short positions, there’s the potential for a powerful short squeeze.

This, in turn, could capture the attention of meme stock traders who like to bet on short squeezes. It’s entirely possible that this occurred when XELA stock shot higher in March, and again in the first half of July. Even after the stock's July climb, there is still room for short squeeze follow-through, judging by the high short volume ratio.

Hence, there might still be possibilities for a quick trade with XELA stock, if that’s your time frame.

Analysts Weigh In on Exela

According to TipRanks' Exela stock analysis, Exela earns a Smart Score of 9, meaning it is likely to Outperform the market.

The Takeaway

Whether your hold time is days or years, there are ways to potentially profit from XELA stock. If the short squeeze possibilities aren’t of interest to you, then feel free to research and learn more about Exela. You’ll undoubtedly find that the company has an impressive track record and considerable reach within a high-conviction, tech-enabled niche market.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.