What happened
SmileDirectClub (SDC 18.18%) dodged a regulatory fastball aimed at its head Wednesday, and investors rewarded the company for it. The company's share price zoomed nearly 15% higher on the day, crushing the slightly (0.2%) downward performance of the S&P 500 index.
So what
In a regulatory document filed with the Securities and Exchange Commission (SEC), SmileDirectClub revealed that Nasdaq has granted the company's request to continue listing its stock on that exchange. It had faced delisting by the popular market operator due to its non-compliance with the Nasdaq's requirements. It received this notification last Thursday, June 29.
Among other statutes, the exchange requires its stocks to sustain a $1.00 per-share minimum bid price.
SmileDirectClub had filed a plan for meeting that minimum price requirement. It did not provide details of this proposal, but it did say that it has a deadline of Nov. 14 to comply with the requirements.
Last November, it received an official notice of delisting from the Nasdaq due to its low stock price. At the time, it was provided an initial compliance period of 180 calendar days to rectify the situation.
Now what
It's understandable for investors to be cheered that SmileDirectClub has received a new lease on life as far as its stock is concerned.
However, not only is the company currently in the position where it continues to face a real risk of being jettisoned by Nasdaq, it's a situation that has been dragging on for months with no clear way for SmileDirectClub to solve the problem. That bullish market reaction, then, doesn't feel entirely warranted.
