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Why Synchronoss Technologies Stock Rose 16% in February

What happened

Synchronoss Technologies (NASDAQ: SNCR) shares beat the market last month by gaining 16% compared to a 4% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX data by YCharts.

That rally erased just a tiny portion of the losses that long-term shareholders have seen on the stock, which is down by more than 60% in the past 12 months.

So what

February's rally came as the struggling company received two pieces of good news. First, executives announced early in the month that they had won a bit more time from the Nasdaq exchange to file their quarterly reports. As a result, the risk of the stock being delisted has been relieved until early May.

Image source: Getty Images.

Second, Synchronoss found a large investor willing to give it $185 million in exchange for a 13% stake in the company. That cash infusion eases the immediate financial pressure, but at a hefty price that includes an annual dividend payment of 14.5%.

Now what

Neither of these developments mitigates the major risks surrounding this company, as management has failed to issue three separate quarterly filings, in addition to restatements of the 2015 and 2016 fiscal years. Synchronoss said it will issue an interim business update later in March, but shareholders will remain in the dark about its true financial situation until it catches up on its accounting filings, ideally sometime before its May 10 delisting deadline.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Synchronoss Technologies. The Motley Fool has a disclosure policy.

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