What happened

Shares of USA Technologies (NASDAQ:USAT) were up more than 12% on Tuesday --  following a drop of more than 10% on Monday -- after a high-profile fund increased its stake in the networking and cashless-transaction company. USA Technologies still appears to be headed for a de-listing, but the buy-in provides at least some hope.

So what

Shares have been under pressure for about a year, weighed down by accounting issues. The company's auditor, RSM, resigned in February, and USA Tech's board at that time warned that some financial statements and related press releases were not reliable.

A hand-drawn stock chart pointing higher.

Image source: Getty Images.

The company had hoped to resolve the issues and file required quarterly financial statements with the Securities and Exchange Commission by Sept. 23, but after markets closed Friday, it said it was unlikely to hit that deadline. Following that missed deadline, the company admitted it expects its shares will be suspended from the Nasdaq, meaning the stock would have to trade on the over-the-counter (OTC) market, or pink sheets.

The pink sheets can be the Wild West of investing, and so it is no surprise that investors ran for the exits following the disclosure. But hedge fund Hudson Executive Capital, which is run by former JPMorgan Chase CFO Douglas Braunstein, appears to be moving in the opposite direction. The firm disclosed a 12% stake in USA Technologies back in May, and according to a new filing appears to have added to its holdings in recent days.

Shares of USA Technologies initially were up more than 20% on Tuesday before falling back somewhat.

Now what

The company is far from out of the woods. Given the delayed nature of hedge fund holdings disclosures, investors had every reason to be concerned that following the latest setback, Braunstein would throw in the towel and move on. USA Technologies said in its filing announcing the further delays that it would look to regain its compliance with filing requirements, and then regain its Nasdaq listing "as soon as practicable."

Even with Tuesday's gains, shares are still down more than 68% since Sept. 1, 2018. If the company can get its accounting in order, this could end up being a buying opportunity. But buying in right now is more speculation than investing, and as the missed deadlines have shown, getting the house in order is no easy thing. Despite the enthusiasm, investors are better off looking elsewhere for tech stocks.