Shares of measurement company comScore (NASDAQ:SCOR) slumped on Monday after the company announced that it will be unable to regain compliance with reporting requirements. The Nasdaq Hearings Panel gave comScore until Feb. 23 to complete its ongoing audit process and restate earlier financial results, but the company now sees no way to meet that deadline. At 11 a.m. EST, the stock was down about 23%.
comScore's long accounting saga began in February of last year when the company's board of directors were notified of potential accounting issues. An investigation was launched, but the company determined in June that more time was needed, missing its own self-imposed deadline.
comScore will now need even more time to complete the process, although the company claims to have made significant progress. comScore pointed to the magnitude of work necessary to review its accounting judgements and estimates between 2013 and 2016 as the main reason for the delay. The company now expects to be done with the process by the summer, but it offered no assurances.
comScore's stock could potentially be suspended from trading and delisted from the Nasdaq if the hearings panel doesn't give the company more time to complete its review. In the case of suspension, shares of comScore would trade on the OTC markets.
comScore CEO Gian Fulgoni tried to sooth investors by talking up the company's strong fundamentals:
Although we are disappointed that we will not meet Nasdaq's deadline, we have made significant progress toward the restatement and in strengthening our internal audit and compliance functions. Furthermore, our business fundamentals continue to be strong, underscored by our healthy balance sheet with $116 million in cash. We are confident in our strategy, our roadmap for innovation, our unique data and technology assets, and in the value we deliver to more than 3,000 clients, all of which we believe will drive long-term growth for our Company.
Delays in comScore's accounting review are being taken by the market as a sign that the outcome of the review will be negative. It's still unclear how significant any restatements of prior results will be, and investors are going to need to wait months longer to find out.