Wheeler REIT(WHLR) stock price just melted: Buy the dip?

Wheeler Real Estate (WHLR) stock price has crashed to a record low as concerns about the company’s future continue. The REIT’s shares plunged to a low of $0.4156 on Tuesday, down by over 99.9% from the highest point during the pandemic. At its peak at $131.87 in 2017, meaning that its total market cap has fallen from over $133 million to $4 million.

Wheeler Real Estate Investment Trust is a company that acts a general partner of Wheeler REIT. It is a firm that merged with Ceder Realty Trust, a then-publicly traded company. It owns retail properties in secondary and tertiary markets, where it leases them to national and regional retailers.

Wheeler Real Estate is not doing well. The most recent results showed that the company’s total loss jumped to over $30 million in the third quarter. Its net loss per basic and diluted shares was $30.6 while its funds from operations was a loss of over $11 million.

A key challenge for Wheeler is that it has a huge mountain of debt. It has over $671 million in total assets and total debt of over $495 million. It increased its debt by $11 million in the last quarter by borrowing $11.6 million from Cornerstone Bank. 

The WHLR stock price continued its downtrend after the company decided to dilute its investors again. In a statement, the firm said that it would issue unregistered common stock to settle December redemption requests.

The company cited the recent deterioration of its stock price and its limited volume of shares of Series D preferred stock. Wheeler has over 980k outstanding shares, up from 850k in 2016. All these issues mean that the company is in a life support, as this analyst warned about a few months ago.

The weekly chart shows that the WHLR REIT share price has been in a strong bearish trend in the past few months. Most recently, the stock has crashed below the key support level at $6.40, the lowest swing in March 2020.

The shares have formed a head and shoulders pattern, which is a bearish sign. It remains below the 50-week and 25-week moving averages. The Relative Strength Index (RSI) has dropped below the oversold level.

Therefore, the outlook for the stock is still bearish as demand dries up. If this trend continues, the stock will likely continue falling as sellers target the key support at $0.30. This means that buying the dip can be dangerous for now.

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