BEIJING - Recon Technology , Ltd. (NASDAQ: NASDAQ:RCON), a non-state owned oil and gas field service company in China, is confronting delisting from the Nasdaq Capital Market after failing to meet the exchange's minimum bid price requirement. The company disclosed on Monday that it had received a determination letter from Nasdaq's Listing Qualifications Department on April 23, 2024, indicating the company's securities are subject to delisting due to the closing bid price falling below the required $1.00 over a sustained period.
The Nasdaq's Minimum Bid Price Rule stipulates that listed securities must maintain a closing bid price of at least $1.00. Recon Technology was granted two consecutive 180-day periods to regain compliance with this rule, which concluded on April 22, 2024, without the company meeting the criterion. Consequently, unless Recon Technology successfully appeals the decision, its ordinary shares will be suspended from trading starting May 2, 2024, followed by the filing of a Form 25-NSE with the Securities and Exchange Commission (SEC), effectively removing the company's securities from listing and registration on the Nasdaq Stock Market.
In response to the delisting notice, Recon Technology has already filed an appeal to a Hearings Panel, which temporarily stays the suspension and the filing of the Form 25-NSE pending the Panel's decision. Additionally, the company expects to execute a consolidation of its Class A ordinary shares on May 1, 2024, which may affect its compliance status.
Recon Technology has been known for supplying advanced automated technologies and services to major Chinese oil exploration companies, such as Sinopec (OTC:SHIIY) (NYSE: SNP) and China National Petroleum Corporation (CNPC), aiming to increase petroleum extraction levels and reduce production costs.
InvestingPro Insights
As Recon Technology, Ltd. (NASDAQ: RCON) faces the possibility of delisting from the Nasdaq, recent data from InvestingPro provides a snapshot of the company's financial health and market performance. With a market capitalization of just $14.44 million USD, Recon Technology is a relatively small player in the oil and gas field service sector. The company's Price / Book multiple, as of the last twelve months ending Q4 2023, stands at a low 0.23, indicating that the stock may be undervalued relative to the company's asset base. This could be of interest to investors looking for potential value opportunities.
However, the company's financial challenges are reflected in its negative revenue growth, which was down 19.89% during the same period. Furthermore, the stock has experienced significant price volatility, with a 1-month total return of -38.51% and a 3-month total return of -54.5% as of early 2024. This level of volatility suggests a high-risk investment profile that may deter some investors. Additionally, the company's operating income margin was notably negative at -101.8%, indicating operational difficulties.
InvestingPro Tips for RCON highlight that the company holds more cash than debt, which is a positive sign of liquidity, and that it trades at a low Price / Book multiple. However, the company is not currently profitable, having not paid dividends to shareholders, and it has been quickly burning through cash. These insights, along with over 15 additional tips available on InvestingPro, could be crucial for investors considering RCON amidst its delisting concerns. For those interested in a deeper analysis, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
It's clear that Recon Technology's financial metrics and recent stock performance present a mixed picture. Investors and stakeholders will be watching closely to see if the upcoming share consolidation and the appeal to the Hearings Panel can reverse the company's fortunes and help it maintain its listing on the Nasdaq.
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