The New York Stock Exchange announced its decision to delist Kuke Music Holding Ltd., a China-focused classical music licensing and streaming company, after the firm failed to maintain the required minimum stock price threshold. The NYSE’s decision, made under Section 802.01C of its Listed Company Manual, resulted in the immediate suspension of trading for Kuke’s American Depositary Shares (ADSs).
Kuke, which had successfully raised $50 million through its U.S. initial public offering just four years ago, has experienced a dramatic decline in its market performance, with its stock falling approximately 85% since the beginning of the year. The company’s shares had been trading below the critical $1 mark since late September, triggering the NYSE’s minimum price requirement violation, which stipulates that listed companies must maintain an average closing price of at least $1.00 over 30 consecutive trading days.
Once a promising IPO that raised $50 million, Kuke Music has plummeted 85%, failing to maintain NYSE’s critical $1 threshold.
Despite implementing a reverse stock split during the previous year in an attempt to bolster its share price and comply with NYSE regulations, Kuke’s financial struggles continued unabated. The company’s weak financial health score and low current ratio pointed to significant liquidity issues, further complicating its market position. The company’s 2024 financial reports revealed a 36% revenue decrease year-over-year, highlighting the severity of its ongoing operational challenges.
Curiously, following the delisting announcement, Kuke’s stock price experienced an unexpected surge, closing at $1.39 and temporarily boosting the company’s market valuation to approximately $130.4 million. This volatility underscores the uncertainty surrounding the company’s future prospects.
Kuke does retain the right to appeal the NYSE’s decision to a review committee of the NYSE Board of Directors. Should the company pursue this option, it would need to present compelling evidence to support its case for continued listing, potentially delaying the final determination. The company recently acquired a controlling stake in Naxos Music Group for approximately $106.35 million, demonstrating its continued commitment to strategic expansion despite financial headwinds.
The delisting represents a significant setback for Kuke, likely impacting its ability to raise capital and maintain its market visibility. Despite these challenges, the company continues to focus on its core business of classical music licensing and streaming, while exploring partnerships in the automotive industry to diversify its revenue streams. Industry analysts suggest the company might need to pursue sync deals as an alternative revenue source to recover from its current financial difficulties. Experts note that proper metadata registration could have helped the company better track and collect royalties from its extensive classical music catalog.
