One option is to conduct a reverse split if a company doesn’t receive an extension. Since 2005, 264 NASDAQ companies have completed a reverse split for one reason or another. The results of this action have been mixed. Currently about 150 companies trade below the $1 NASDAQ continued listing requirement even though some are profitable with strong cash flow. Whether or not the economy is to blame for the low valuations, companies have very few options to maintain their NASDAQ status.
Perhaps there may be an alternative sooner than we think. Next year NASDAQ will launch the NASDAQ BX Venture Market. This new exchange was recently approved by the SEC and will provide companies with a national listing above a standard OTC quotation.
Following are highlights from a recent conversation with NASDAQ’s director of listings about the new BX Venture Market:
- Eligibility for the market requires a company to meet a number of quantitative standards including a $0.25 per share requirement for securities that were previously listed on a national exchange;
- $1 per share requirement for companies not previously on a national exchange;
- Companies must know if the move will impact investors ability to continue to own shares;
- Securities will need to meet the initial listing requirement of $4 to relist on the NASDAQ Capital Market
While the BX Venture Market may be a viable solution, nothing beats operational performance. However, this new market can be a good platform for companies as they reestablish their footing in today’s economy.
— Matt Sheldon, email@example.com