Kuke, a Chinese classical music platform, faces delisting from the NYSE

China-based classical music streaming platform Kuke Music, which made its debut on the New York Stock Exchange in January 2021, faces delisting from the NYSE after its stock price traded below the required minimum for more than 30 days.

Under US listing rules, stocks that trade below $1.00 for more than 30 days are considered non-compliant. As of Nov. 2, Kuke’s 30-day average price for its US Depositary Shares was $0.55.

The company received a letter of the NYSE on September 29, requiring the company to return its stock price and average price above $1.00 within six months of said date.

In the event the company fails to meet the requirement, “the NYSE will initiate suspension and delisting proceedings,” according to a statement released last week (November 3).

In response, Kuke said he would “take all reasonable steps to regain compliance within the prescribed grace period” and that “the NYSE notification letter does not affect the company’s business operations.”

Since Monday (November 7), Kuke’s actions fell to an over-month low of $0.48. The company’s stock closed down 5.9% on Monday, extending its 3.8% drop on Friday (November 4).

Kuke launched its US listing in January 2021, raising $50 million after pricing its 5 million ADS IPO at $10 apiece.

He marked the company third attempt to raise funds overseas after its delisting from China’s National Stock and Listing Exchange in November 2017 and after two failed attempts to launch an IPO in Hong Kong, closer to home, in June 2018 and January 2019.

Its most recent closing price is now down 95% from the company’s IPO price.

Kuke’s lukewarm appetite for stocks comes amid a sale Chinese stocks at home and abroad due to concerns about the health of the Chinese economy and other geopolitical factors.

The Nasdaq Golden Dragon China Index, a gauge of the largest Chinese companies listed in the United States, fell 2.2% on Monday, ending a four-day winning streak. The rebound was sparked by signs that the US audit of Chinese companies listed on New York stock exchanges is making progress.

A landmark audit agreement between U.S. and Chinese regulators has relieved many companies that faced delisting from U.S. stock exchanges due to potential audit violations.

Meanwhile, Kuke is also among dozens of Chinese companies whose shares are at risk of being forced off US stock exchanges after the US Securities and Exchange Commission added them to a so-called “provided thatnotthe whole list » issuers with potential audit violations.

The company was added to this list in June. The list also includes Tencent Music Entertainment Group and NetEaseoperators of China’s largest music streaming services.

In addition to external factors, Kuke’s poor performance in capital markets may also be due to its lackluster finances.

In the second quarter for the year, the company’s revenue fell 35% year-on-year to 54.44 million yuan (US$7.53 million), weighed down by lower revenue. business from its subscription and licensing services and smart music learning solutions, which offset the 8% increase in live streaming revenue. musical events.

Kuke, however, managed to make a profit of 3.4 million yuan, compared to a net loss of 11.4 million yuan in the second quarter of 2021. The company’s institutional subscribers in China rose from 809 to 812.

“Going forward, given the challenges presented by the macroeconomic environment during the second quarter, we will continue to focus on strengthening our existing product and service portfolio and implementing cost reduction initiatives. costs to help us achieve a more optimized cost structure in the future,” Kuke CEO He Yu said in August.

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