Tuniu, a leading online leisure travel company in China, announced on Monday that it had received a warning from the Nasdaq on April 13 since the closing price of its American Depositary Shares (ADS) had fallen below the requirements for maintaining its place on the exchange.
According to the Nasdaq’s listing rules, a listed company will normally receive a delisting warning if its stock price falls below $1 per share and remains there for 30 consecutive business days. Typically, if the company fails to raise its stock price to the trading standard within 90 days after receiving the warning, the company will be forced to delist.
However, in view of the impact of the Covid-19 epidemic on the global economy, the Nasdaq had to adjust the rule in 2020, extending the 90-day period to 180 days. Therefore, Tuniu has 180 days to boost its stock price above $1 per share for more than 10 consecutive business days in order to avoid being removed from the exchange.
Tuniu said in the announcement that the notification letter has no current impact on the trading of the company on the Nasdaq exchange and that the company will take all reasonable measures to return to compliance. In addition, if its share price fails to reach the required $1 per share threshold before October 10, 2022, Nasdaq authorities may still provide the firm with an additional 180-day compliance period.
This is the second time that Tuniu has received a delisting warning from the Nasdaq since the outbreak of the epidemic. In May 2020, Tuniu received the first notification letter from the exchange since the company’s stock price had fallen under $1 per share and remain there for more than a month.
Tuniu subsequently announced an agreement with Caissa Tosun Development Co., Ltd., while JD.com transferred all of the Tuniu shares held by its subsidiaries to Caissa Tosun Development Co., Ltd. The three parties jointly developed a tourism business. This series of actions effectively raised Tuniu’s share price an allowed the company to remain listed on the Nasdaq.
However, since 2020, Tuniu’s performance has not improved. On March 16 this year, the company announced its unaudited annual performance report for the 2021 fiscal year. The report shows that the firm garnered a net income of 426.3 million yuan ($66.5 million) in 2021, down 5.3% from 2020. Meanwhile, its annual operating loss narrowed to 180 million yuan from 1.3 billion yuan in 2020, and net losses narrowed by 90% to 130 million yuan. The company’s gross profit margin for the whole year decreased by 7 percentage points year-on-year to 40.2%.