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Why SigmaTron International, Inc. (SGMA) stock is falling today?

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Shares of the SigmaTron International, Inc. (SGMA) stock were falling in the pre-market trading session today on July 22, 2021. The SGMA stock price saw a decline of 6.99% to drop at $5.06 a share at the time of this writing. In the previous trading session, SGMA stock was green and went high by 7.72% at closing. Let’s discuss more about SigmaTron.

What’s Happening?

There seems to be no news related to SigmaTron International in today’s date to justify the bearish sentiment however, SGMA yesterday on July 21, 2021, announced the execution of a definitive agreement and plan of merger with Wagz, Inc which is the privately held pet technology. This merger is the result of the previous announcement that happened last year on  June 4, 2020, in which SGMA stock and Wags, Inc executed the letter of intent in which the proposed business combination was mentioned. This letter of intent has now become the framework for the merger agreement between two parties.

According to the agreement, the shareholders of Wagz would get 2,443,870 shares issued by SigmaTron which means that the stockholders of Wagz own approximately 28% of SGMA stock and Wagz will operate as the wholly-owned subsidiary of the SigmaTron. It is expected that deal would be closed by the end of September 2021 after reaching certain milestones and meeting the conditions by both parties before closing.

Forgiveness of $6.3 million loan:

On July 14, 2021, the SGMA stock did announce the full forgiveness of its Small Business Administration (“SBA”) Paycheck Protection Program loan which was approximately $6.3 million. The forgiveness was received due to  Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on April 23, 2020. The SGMA stock will do accounting for the forgives in the first quarter of 2022 financial results.

Financial View of the SGMA stock:

In the third quarter of 2021 financial results, the revenue was reported $71.5 million compared to $67.4 million in the third quarter of 2020. Net income for the SGMA stock reported $249,268 in the third quarter of 2021 as compared to a net loss of $217,039 in the same tenure of the previous year.

Conclusion:

Today’s market sentiment is not in favor of SGMA stock, however, it went high after announcing its recent merger agreement with Wagz, Inc. Recent financial results were positive as compared to the previous year’s same period.

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