Shares of Codere Online Luxembourg (NASDAQ: CDRO) plummeted on Monday after the gaming company announced that its auditor, Marcum, resigned on December 20th. This development could jeopardize the operator’s ability to maintain its listing on the Nasdaq Stock Market.
In late trading, shares of Codere Online’s online betting arm of Spanish gaming giant Codere fell by 8.42%, with trading volume more than double the daily average. A recent regulatory filing revealed that Marcum resigned because it couldn’t verify the completeness of Codere Online’s 2021-22 financial records due to the company’s relationships with third-party platform providers.
Codere Online is now dependent on a successful NASDAQ appeal hearing with challenging time constraints, even if granted an extension to May 12, 2025. Stifel analyst Jeffrey Stantial noted in a report to clients: “CDRO is now reliant on a successful NASDAQ appeal hearing with challenging time constraints even assuming CDRO is granted extension to 5/12/2025.”
In November, Codere Online announced it was appealing a delisting notification from Nasdaq. A hearing on this matter is scheduled for January 16th, and the company is attempting to fill the auditor vacancy before the hearing.
Codere Potential Delisting Weighs on Stock
The potential delisting from Nasdaq is clearly impacting the stock, with shares of Codere Online down 13.24% over the past week and 17.24% over the past month. However, Codere Online has seen a year-to-date increase of 113.95%, making it one of 2024’s best-performing gaming stocks. Stantial maintains a “buy” rating and a $10 price target on the stock, implying potential upside of 58.9%.
Delisting often occurs when shares trade below certain levels, such as $5 and $1, but Codere Online’s shares are currently around $6.30.
Auditor Resignation Adds ‘Friction’ for Codere Online
Stantial acknowledged that Codere Online could face “additional friction” due to Marcum’s resignation, but he also noted that there is still hope for retaining the Nasdaq listing given the company’s strong operational track record. “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,” he observed.
Losing its Nasdaq listing would be a significant blow to Codere Online, as it would result in the company trading over-the-counter, likely diminishing its pool of potential professional investors.
