RXO

RXO Inc($RXO) Director Acquires $125,000 in Shares After 55% Stock Decline, Signaling Confidence Amid Financial Challenges Following Coyote Logistics Acquisition

05/13/2025 20:30

Amid a significant decline in the stock price of logistics company $RXO, board member Thomas Szlosek has made a notable stock purchase, drawing investor attention. On May 9, Director Szlosek acquired 8,700 shares at an average price of $14.41, amounting to approximately $125,354. This purchase comes at a time when $RXO's stock has fallen about 55% from its 52-week high of $31.90 (reached on July 30, 2024). Currently trading at $16.16 (as of May 12), $RXO shares plummeted from $19.55 in early April to as low as $12.58 on April 21, before showing signs of recovery in recent days. The insider purchase at this juncture may signal confidence in the company's long-term value. Szlosek's acquisition follows a pattern of insider buying among $RXO's board members. In November last year, Director Michelle Nettles purchased 1,800 shares at $27.89 per share, while in August 2024, major shareholder MFN Partners made a substantial acquisition of approximately 10.27 million shares at $20.21 per share, totaling around $207.5 million. $RXO announced in June 2024 that it would acquire Coyote Logistics from United Parcel Service (UPS) for $1.025 billion, with financing through a combination of equity and debt, including investments from MFN Partners and Orbis Investments. In August, the company announced a $550 million private financing for this acquisition, which was reportedly completed in early Q4 2024. Despite this strategic expansion, $RXO has faced financial challenges. On February 5, 2025, the company reported a larger-than-expected quarterly loss of $20 million, causing its stock to drop 16.6% in a single day. Subsequently, on April 4, Oppenheimer downgraded $RXO from 'outperform' to 'perform' and withdrew its $25 price target, further pressuring the stock. In its most recent earnings report on May 7, 2025, $RXO reported an adjusted loss of 3 cents per share for Q1 2025, worse than analysts' expectations of a 2-cent loss. Revenue increased by 57% year-over-year to $1.43 billion, but still fell short of the market's $1.49 billion forecast. The company reported a net loss of $31 million for the quarter. Despite these financial challenges, the company has achieved significant revenue growth following the Coyote Logistics acquisition. Notably, less-than-truckload (LTL) brokerage volume surged by 26% year-over-year, while last-mile services experienced a 24% increase in stop growth. However, full truckload volume declined by 8%, impacting overall brokerage volume, which fell by 1% year-over-year. The logistics industry is currently navigating trade tensions and economic uncertainty. President Trump's tariff policies in early 2025 affected the sector, though the recent decision by the U.S. and China to temporarily pause their trade war for 90 days may provide some temporary relief to the industry. Examining $RXO's financial health, the company holds approximately $685 million in debt and about $16 million in cash. Its debt-to-equity ratio stands at 43.16%, indicating moderate leverage. The current ratio is 1.30, suggesting the company is positioned to meet its short-term obligations. However, operating cash flow is negative at -$21 million, raising concerns about its ability to generate cash from operations. Looking ahead, $RXO anticipates second-quarter adjusted EBITDA to range between $30 million and $40 million, with brokerage gross margins expected to be between 13% and 15%. The company also expects to realize over $70 million in cash synergies from the integration of Coyote Logistics. In this context, Director Szlosek's recent stock purchase may be interpreted as a positive signal that insiders have confidence in the company's long-term value and strategic direction. However, investors should approach with caution given the financial challenges facing the company and the uncertainties in the industry. Currently, five brokerages have assigned $RXO a 'buy' rating, thirteen have given it a 'hold' rating, and three have issued a 'sell' rating, with a median 12-month price target of $20, approximately 23% above the current price. Despite its recent decline, $RXO's stock has shown an increase of approximately 20.78% over the past year, though it has decreased by 30.29% year-to-date. Investors should monitor $RXO's performance improvement and synergy effects from the Coyote Logistics integration, with upcoming quarterly earnings reports and management guidance serving as key indicators. While Director Szlosek's purchase signals internal confidence in the company's future, investors should maintain a balanced perspective given market uncertainties and the company's financial challenges.

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