Published on: December 30, 2024, 01:45h.
Last updated on: December 30, 2024, 01:46h.
Shares of Codere Online Luxembourg (NASDAQ: CDRO) declined on Monday following the resignation of its auditor on Dec. 20. This development may impact the company’s ability to maintain its listing on the Nasdaq Stock Market.
By the end of the trading day, Codere’s online betting division saw its stock price drop by 8.42% with trading volume exceeding the daily average. The company’s recent filing revealed that its auditor, Marcum, resigned due to challenges in verifying the completeness of the online gaming operator’s financial records for 2021-22 related to third-party platform providers.
“CDRO is now reliant on a successful NASDAQ appeal hearing with challenging time constraints even assuming CDRO is granted extension to 5/12/2025,” said Stifel analyst Jeffrey Stantial in a report to clients.
In November, Codere Online announced its appeal of a delisting notification from Nasdaq. A hearing regarding this matter is scheduled for Jan. 16, and the company is working on appointing a new auditor before the hearing.
Codere Potential Delisting Weighs on Stock
The uncertainty of potential delisting from the Nasdaq has led to a 13.24% decline in Codere Online’s stock price over the past week and a 17.24% decline over the past month.
Despite this, Codere Online has shown a 113.95% increase year-to-date, positioning it as one of the best-performing gaming stocks in 2024. Stantial has a “buy” rating and $10 price target on the stock, suggesting a potential upside of 58.9%. The company’s current stock price is around $6.30, above delisting thresholds set by major exchanges.
Codere received the delisting notification from Nasdaq for not complying with Listing Rule 5250(c)(1), the public reporting rule, prompting the need to swiftly find a new auditor.
“CDRO notes advanced discussions with replacement candidates, we expect likely targeting ahead of the 1/16/2025 appeal hearing, with parallel efforts to file the FY23 20-F and ensure smooth transition in auditor. Under NASDAQ policy, a successful extension would grant CDRO until 5/12/2025 to complete both FY23 & FY24 F-20 filings,” adds Stantial.
Auditor Resignation Adds ‘Friction’ for Codere Online
While Marcum’s resignation adds complexity to the situation, Stantial remains optimistic about Codere Online’s ability to meet Nasdaq’s listing requirements given the company’s strong operational history.
“Hence, we remain somewhat optimistic CDRO will resolve the delayed filing by the requested 5/12/2025 extension date, though acknowledging the challenging time constraint and CDRO’s limited control over auditor demands,” observed Stantial.
If Codere Online loses its Nasdaq listing, it may impact the company’s ability to attract professional investors, with shares potentially trading over-the-counter instead.