Nasdaq change gives Mammoth more time

Call it a silver lining. Nasdaq is offering one to an Oklahoma City-based energy company whose stock i s i n danger of being delisted from t he e x c hange, f i l i ngs t hey recently made reveal.

Mammoth Energy Services, trading on the exchange under the ticker symbol TUSK, was notified by Nasdaq on April 17 that its stock could be delisted, given that its per- share bid price had been below a minimum of $1 for 30 consecutive business days.

Under the exchange's listing rules, a company normally would be given a period of 180 days to regain compliance. In the case of a per- share bid price, it would need to be at least $1 or more for 10 consecutive business days.

But Mammoth s t a t e d i n i t s f i l i ng t hat Nasdaq al so filed a rules change with the U.S. Securities and Exchange Commission a day e a r l i e r that suspends its price-based requirements, through June 30.

That means Mammoth will have until Dec. 28 to regain c ompliance wit h t he r ul e , giving it an extra two months of time to address the issue.

“One unavoidable consequence of the actions being taken to reduce the spread of COVID-19 is a reduction, or complete interruption, in revenue for many companies,” Nasdaq's filing stated.

“These businesses will have little or no revenue to offset normal operating expenses and increased costs associated with the crisis, which can depress their stock prices until more certainty around the end of these protective measur e s i s a v a i l a b l e , ” i t continued. “These necessary measures also have affected equity markets, which have seen significant declines.”

N a s d a q s a i d i t s e e s a n increasing number of companies whose securities were becoming noncompliant with its listing rules.

“The d e c l i n e i n g e n e r a l i n v e s t o r c o n f i d e n c e h a s resulted in depressed pricing for companies that otherwise remain suitable for continued listing. Similarly, Nasdaq believes that it is difficult for companies that are already n o n c o mpl i a n t wi t h t h e s e requirements to take action to regain compliance,” the filing stated.

J a k e Doll a r hi de, CEO of Tulsa-based Longbow Asset Management, said Nasdaq's plan isn't surprising.

“They a r e r unning of f a familiar playbook that they used i n 2008,” Dollarhi de said. “I think a lot of what has provided calm in this market is that the playbook used in 2008 and 2009 is being regenerated and provides investors with a familiar pattern.”

Do l l a r h i d e s a i d p a r t o f Nasdaq's motivation probably is rooted in the fact that it receives listing fees from the companies that it carries and doesn't want to lose that revenue.

He added, however, t hat keeping companies listed on the exchange both helps the c o mpanie s r e mai n v i s i b l e to investors and helps them maintain the l i quidity they need as they deal with ongoing economic impacts caused by the collapse in energy prices and the coronavirus epidemic.

It also improves the ability of listed companies to rebound a s t he e c o nomy b e g i ns t o recover once the crisis has eased, Dollarhide observed.

“They know that it is better for their customers to be listed on Nasdaq than it would be to fall into irrelevance and have their stocks traded on the pink sheets,” he said.

As for Mammoth, its filing stated it could obtain an additional 180 days beyond Dec. 28 to regain compliance with the rules, if needed. The company could also propose a reverse stock split during that time to regain compliance.

Mammoth's stock fell to a recent low of 57.5 cents a share on April 7, but generally has been improving in value since then.

On Wednesday, its bid price was 81.6 cents per share.