Exela Technologies Inc (NASDAQ: XELA) is rocketing in the market this morning, trading on gains of more than 24% early on. The gains come after the company announced that it was selected to be part of a $2 billion government project. Here’s what’s happening:
XELA Stock Pops On Project Award
In a press release issued early this morning, Exela Technologies said that it has been selected by the United States Department of Veterans Affairs to provide services under a new $2 billion Veterans Intake, Conversion, and Communications Services program.
XELA said that it will be working in tandem with General Dynamics Information Technologies on the project. The two teamed up to bid on the project and were selected as one of six recipients of an award from the VA. The contracts with the two have a maximum potential value of $900 million over a 5-year term.
Exela has long had a relationship with the government in the assistance of Veterans’ benefits claims. The contract will also build on the existing relationship between the company and GDIT, a relationship that started in 2015 when GDIT selected XELA to assist with data intake and automated business solutions.
In a statement, Suresh Yannamani, President at XELA, had the following to offer:
Exela is honored to serve our Nation’s Veterans. Our ongoing work with the VA is an important part of their digital journey to address the benefit needs of Veterans and we look forward to our continued partnership.
Why Investors Are So Excited
Any time a stock is up more than 20%, there’s overwhelming excitement among investors. So, why are investors so excited about the news? Well, there are multiple reasons:
Reason #1: Largest Contract In Exela Technologies’ History
If the company is able to access the complete $900 million that this contract has the potential to generate over the next five years, it would be the largest revenue-generating contract in the history of the company. Access to this amount of work is incredible for a company at the scale of XELA.
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Reason #2: Contract Value v. Market Cap
Take a moment to jump over to Yahoo! Finance and take a look at the market cap of XELA. At the time of writing this article, the stock traded with a market cap of just over $200 million, and that’s after gaining more than 20%.
With the new VA contract, XELA and its partner have access to $900 million. That means that this contract represents an opportunity that is valued at four and a half times the value of the company as a whole.
Ultimately, when a small company lands a big contract like this, we call that a turning point. It seems like XELA may have found its turning point and made a turn toward the big leagues today!
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Reason #3: Expanding Relationships Validate Ongoing Efforts
Finally, Exela Technologies has been working incredibly hard to show their value, not only to investors, but to customers, partners, and anyone else that may take interest in their business. This work is paying off in a big way.
In just a few years, the company has significantly expanded its relationship with the United States VA and with General Dynamics Information Technologies. As these relationships continue to expand, and new relationships are created, the value of the company will only grow.
In business, your patents, your product, your process, it’s al important. However, one of the things that my business partner and I talk about all of the time is relationship building. Once you bring a new partner or new customer into the loop, building and maintaining the relationship is the best way to ensure that the new partner or customer brings as much value to your company as you bring to them.
For me, one of the most important factors here is that XELA seems to have the same mindset. Through strong relationship building skills, the company has expanded its partnership with GDIT and received it’s largest contract from the VA. As the company continues to focus on quality, innovation, and relationships, value is likely to continue rising!
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