ShiftPixy, Inc (NASDAQ: PIXY) was a top gainer in yesterday’s trading session. After losing value for months, the stock rallied by 138.54% to close the day at $19.25. This came after the company announced the reassignment of capital to its restaurant business. The company stated that, it had sold its PEO business for $19 million. The PEO business represented 60% of the company’s revenues, but is mainly made up of low margin clients.
The company intends to use the money on the higher-margin restaurant business. It further stated that the restaurant business has double the gross margins, a factor that will allow it to keep half the gross margins.
The deal was completed on the 1st of January 2020, and the company received $9.7 million in cash. The rest of the money will be paid in installments of $197,916.66 would be paid over 48 months. The money will be due every month no later than the 15th of every month from April 2020 up to April 2024. By the end of the payments, ShiftPixy will receive anywhere between $18 million and $22 million.
The company also announced that, it will retain the worksite employees but, it will not process their payroll or give them benefits. These benefits will be given to them by the purchaser. Since the sale, the company has been adding a huge number of customers. The goal is to push past its quarterly gross margin by the end of the first half of the year. Commenting on the deal, the CEO, Scott Absher stated that, they decided to monetize a part of the business that they believed was not crucial to its HRIS platform growth plans.
Looking at its price action, the stock was in a breakout. It gapped up and opened the day at $24.51 and traded the day between a low of $17.80 and a high of $27.50 before closing the day at $19.25. Volumes in the day stood at 1.72 million.
About ShiftPixy Inc.
ShiftPixy Inc is an administrative services business. It is based in Irvine, California.