Online Stock of Codere Drops Significantly After Resignation of Auditor
In the financial world, Codere Online Luxembourg (NASDAQ: CDRO) is currently navigating a challenging period. The online gaming and betting company is actively seeking a new auditor to fill the vacancy left by Marcum, who resigned on December 20, 2024.
The resignation was due to the inability to establish the completeness of Codere Online's 2021-22 financial records, given the company's relationships with third-party platform providers. This vacancy, coupled with the upcoming hearing on January 16 to appeal a delisting notification from Nasdaq, has placed Codere Online under significant time pressure.
The company is not in accordance with Nasdaq's Listing Rule 5250(c)(1), also known as "the public reporting rule." This rule requires companies to maintain a certain level of public reporting, which Codere Online has failed to meet due to the delayed filing of its FY23 financial report.
In an effort to rectify this situation, Codere Online has advanced discussions with replacement auditor candidates. The company aims to file the FY23 20-F and ensure a smooth transition in auditor. However, the resignation of Marcum could jeopardize Codere Online's ability to retain its listing on the Nasdaq Stock Market.
Losing its Nasdaq listing would result in Codere Online trading over-the-counter, which would likely diminish its pool of potential professional investors. Stifel analyst Jeffrey Stantial wrote a new report to clients stating that CDRO is now reliant on a successful NASDAQ appeal hearing with challenging time constraints, even assuming CDRO is granted an extension to May 12, 2025.
In late trading, shares of Codere Online are lower by 8.42%. Over the past week, shares have dropped by 13.24%, and over the past month, the decline is even more pronounced at 17.24%. Despite these challenges, Codere Online has a strong operational track record.
Stantial, the author of the report, has a "buy" rating and $10 price target on the stock, implying potential upside of 58.9%. Despite the current difficulties, Stantial remains somewhat optimistic that CDRO will resolve the delayed filing by the requested extension date.
The volume of shares traded is more than double the daily average, indicating a high level of investor interest in the company's situation. As Codere Online moves forward, it will be interesting to see how it navigates these challenges and whether it can maintain its position on the Nasdaq Stock Market.
