CarParts.com, Inc., a retailer of automotive parts and accessories, has been notified by NASDAQ that it is currently not meeting the minimum bid price requirement, according to an 8-K filing with the Securities and Exchange Commission. The company's stock has been trading below $1 for 30 consecutive business days, violating NASDAQ's Listing Rule 5450(a)(1).
As of Wednesday, September 18, 2024, the company has 180 days, until March 17, 2025, to regain compliance with NASDAQ's Bid Price Rule. To achieve this, CarParts.com's common stock must have a closing bid price of at least $1 for a minimum of ten consecutive business days.
If CarParts.com fails to meet the requirement by the Compliance Date, it may be granted an additional 180-day period to regain compliance, during which the company would need to transfer its listing to the NASDAQ Capital Market.
This would be contingent on meeting all other initial listing standards, except for the bid price. The company would also need to inform NASDAQ of its intention to remedy the deficiency, potentially through a reverse stock split.
Should the company not regain compliance within the given timeframe, and if it is not eligible for an additional period, NASDAQ will issue a written notice of delisting. CarParts.com would then have the right to appeal the decision before a NASDAQ Listing Qualifications Panel.
The company has stated its intention to actively monitor its closing bid price and is considering options to address the issue and regain compliance with the Bid Price Rule. However, there is no guarantee that CarParts.com will be able to meet the NASDAQ's requirements within the designated period.
In other recent news, CarParts.com faced a challenging second quarter, with a reported decrease in revenue and gross profit. The company's Q2 revenues stood at $144.3 million, marking an 18% year-over-year decrease. Gross profit for the same period was down 20% to $48.4 million, with a gross margin of 33.5%.
Despite these financial challenges, the company remains optimistic about its future growth, citing ongoing strategic changes aimed at improving margins and profitability.
In line with this, Lake Street Capital Markets has adjusted its outlook for CarParts.com, reducing the price target from $3 to $2 while maintaining a Buy rating on the stock.
The firm's analysis acknowledges the company's ongoing efforts to enhance its business, such as the improvement of its online and mobile app platforms, optimization of its product mix, and investment in marketing. However, the firm also recognizes the company's current challenges, reflected in the year-over-year decline in revenue, margins, and EBITDA.
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