By David “Newman” Phillips
**updated to include clarification on NASDAQ delisting processes**
This past Friday, Sirius XM (SIRI) saw some wild swings in stock price because of the Russel Index rebalancing. I will not get into my opinion on that, as it has already been covered on the SatWaves messsage boards, but what I do want to get into is another delisting possibility that is looming: NASDAQ. The NASDAQ has put a hold on its listing requirements until July 19th, which was previously extended from an April 19th deadline. The announcment of that extension came on April first. With July first rapidly approaching, we may be due for another announcement regarding the intentions of the NASDAQ. RUSSEL didn’t feel the need to modify their listing requirements. What will NASDAQ decide?
Truthfully, I think they will extend it again. Just by doing a quick search, I find 266 NASDAQ listings sitting below the $1 threshold, with nearly half of those (125) listed under 50 cents. With NASDAQ playing host to just under 3000 companies, this would represent nearly 10% of the companies getting delisted. I just don’t think it happens, and we will get an extension notice within the next week, but what if they don’t extend the deadline? Who cares.
That is right, I said who cares. I say this for 2 major reasons. First, with the way the stock has been trading and all of the short-, mid-, and long-term catalysts coming up, I can see this stock breaking the $1 requirement by the end of the year. Secondly, I think all of the stars and moons have come into alignment, and I am officially blessing a reverse split by the company. For those that follow the forums, you know that I have been ardently against a reverse split unless a lot of things come together to make the timing perfect, and I think we are very nearly there. the Apple (AAPL) iPhone app has hit the street, the new Bond Issuance has been a huge success, new movements in the used car business, improved fundamentals, and improved OEM sales and production has all lead to a tidal wave of positive news for the company and the stock, which will lead it higher throughout the year (and by the way, the release of StockShock: The Movie didn’t hurt either!).
It is true that “nothing” will happen exactly on July 19th if the listing requirements are not extended further. What will happen, however, is that this will start a 30 day clock on Sirius XM to allow them to get over $1 for even a single day. If this does not happen, they will get a delisting notice, which they have to publicly announce. From that day, they have 180 days (6 months) to get back into compliance (share price over $1 every day for 1 week).
If they are not in compliance at the end of that 6 month period, Sirius XM has the right to appeal for extension. This appeal is granted most of the time, but is not guaranteed. If the NASDAQ grants their appeal for extension, Sirius XM must file a plan on how they will come back into compliance with NASDAQ listing requirements, which the plan must include the provisions for a reverse split if necessary.
Here is a timeline if the stock price remains under $1:
July 19th 2009: Listing requirements are reinstated
August 19th 2009: Sirius recieved delisting notice, starting 180 day clock.
February 19th 2010: End of 180 day clock. If still under $1, Sirius XM can appeal for extension.
August 19th, 2010: Delisting if no R/S and not above $1 (There are other considerations as well, done on a case-by-case basis by NASDAQ)
- David “Newman” Phillips
You can contact the author at newman@satwaves.com
Disclosure: LONG SIRI, No position in any other security mentioned.
delisting means exactly? (The stock wouldnt be traded on the nasdaq? or just wouldnt be shown??)
russell and nasdaq are two different birds…
one matters and the other does not.
nasdaq matters; however, remember that when they suspended the requirements, siri went back to day 1.
how many days does siri have to cure this?
nothing will happen on july 19th…there will be no delisting…nothing!
regardless of whether or not the rules waiver are extended or not.
siri will have plenty of time to cure this….and, if they don’t, they still have the reverse split already approved.
worrying about this is, pardon the analogy, whether I take a sh!t in the morning before breakfast, or in the afternoon after lunch….it’s worrying about something you just don’t need to worry about.
shark: So the russell didnt matter at all, and that is why people had their stop losses triggered and sold for as low as 28 cents per share when the stock was trading at 44? Does not sound like a non-issue to me. The debt coming due in 2011 is a non-issue as well, but it still holds the stock price down. And going by your analogy, it really doesn’t matter to me when you take a dump, but if the stock price is going to drop, even temporarily when you flush, I would like to know when it is going to happen (to lock in gains, to buy more shares, whatever). That is why I even stated it is a non-issue, but you should still be aware of it.
It is true that “nothing” will happen July 19th if the listing requirements are not extended further. What will happen, however, is that this will start a 30 day clock on Sirius XM to allow them to get over $1 for even a single day. If this does not happen, they will get a delisting notice, which they have to publicly announce. From that day, they have 180 days (6 months) to get back into compliance (share price over $1 every day for 1 week).
If they are not in compliance at the end of that 6 month period, Sirius XM has the right to appeal for extension. This appeal is granted most of the time, but is not guaranteed. If the NASDAQ grants their appeal for extension, Sirius XM must file a plan on how they will come back into compliance with NASDAQ listing requirements, which the plan must include the provisions for a reverse split if necessary.
Here is a timeline if the stock price remains under $1:
July 19th 2009: Listing requirements are reinstated
August 19th 2009: Sirius recieved delisting notice, starting 180 day clock.
February 19th 2010: End of 180 day clock. If still under $1, Sirius XM can appeal for extension.
August 19th, 2010: Delisting if no R/S and not above $1 (There are other considerations as well, done on a case-by-case basis by NASDAQ)
actually, yes, it didn’t…
people have been told for how long not to have stop losses?
look at the price the day before the removal from russell (thursday) and the day after the removal (monday) and notice something similar about the PPS, it was about the same!
when I said didn’t matter, I am talking about long term, not a day issue, and it did not mean to imply you should not write about it.
newman, wish you had put the second and last paragraphs of your comments to me into your article…I think that they are helpful to the newbies that can get mislead by others citing to some of your articles out of context.
actually, is there a way to put the second and last paragraphs to me into your article itself? I think that they are helpful to fully explain this…and, then when someone reposts your article (as they always seem to do), they will be in the repost.
It would be nice to actually see some information about the I-Phone app sub acquisitions. How many subs were actually obtained, etc. Also, when is the Rimm amd Palm app releases coming? How will they do?
The movie, hopefully will do some good but nothing concrete as of yet. Auto sales, again, nothing concrete as of yet. I know we have some time, but we need FACTS.
Shark: Done. Hopefully, the different publications (namely Google News and Seeking Alpha) will pick up the updated version of the story.
glad to be of assistance!
Newman, Shark..
Although we agree that Sirius has enough time even if they are served a delisting notice but ‘it doesn’t matter’? I’m not so sure about that.
Think of the headlines from sirius bashers: “SiriusXM to be delisted in 30 days” . Think what that will do the the stock price.
Only 2 things can save the SP.
1. Get over $1 on your own
2. NASDAQ extends the deadline by another 6 months so we get over $1 on our own.
any other scenario (notice, appeal etc) will kill the SP
hoping: Just as I and shark have said, long term, it doesn’t matter. Short term, it could definately affect the price of the stock, hence the entire reason for the article. I think any of the two things you cite are definate possibilites. Sirius could also come out and state that rather than dealing with any of those items, they are going to do the reverse split. I think over the next month or so would be the perfect time to do it.