Agile Thought (NASDAQ: AGIL) stock is up 53% after falling 17% yesterday. The apparent cause of this rise is that Agile has just gone into Chapter 11. For of course this is the new normal, a stock price goes up when the company claims bankruptcy protection. Everyone knows that’s value additive for the equity, right? Alternatively we might, just ever so gently, suggest that the meme stock traders haven’t quite grasped the balance of how these things work out.
As to what Agile actually does: “AgileThought, Inc. provides digital transformation services in the United States and Latin America. It offers organizational transformations, training and certifications, and product management services. The company provides application engineering and DEVOPS, cloud architecture and migration, data analytics, automation, application modernization, UX/UI design, artificial intelligence, and machine learning services.” OK, nice collection of current buzzwords there. The problem is that Agile doesn’t seem to do these things very well. Thus this news: “Irving-based AgileThought Inc. filed for Chapter 11 bankruptcy and announced it had received additional working capital in a go-private transaction. AgileThought, which went public in 2021 in a SPAC merger, said the 90-day Chapter 11 reorganization under the U.S. Bankruptcy Code is “a proven mechanism that will allow it to execute the transaction.”” Isn’t it lovely to see SPACs maturing into such profitable little companies?
Agile Thought stock price from Google Finance
Of course this is called a “strategic financial restructuring” because “we’re bust” is such an unlovely phrase. Looking at the balance sheet we don’t see much in the way of assets there. Of the $189 million claimed $130 million seem to be goodwill and intangibles. We’d suggest that those aren’t going to turn into a residual payment to the equity.
Now, sure, we can be wrong about such things. But our expectation is that the equity here is going to go to zero. The company itself is already saying that the final outcome is going to be a private company after the recapitalisation.
We would suggest - suggest - that the rise today is simply the meme stock boys having a go. Nothing wrong with meme stocks, can be very fun in fact. But we think the end game here is already determined as a $Zero value for AGIL stock