What: Shares of comScore (NASDAQOTH:SCOR) fell 27% in March, according to data from S&P Global Market Intelligence. The audience and brand value measurement specialist delayed the filing of its 2015 10-K statement, pointing to an internal review of potential accounting issues. Investors don't take kindly to these delays, and the stock plunged as much as 29% on the day of that announcement.
So what: According to a press release, comScore "received a message" regarding possible accounting problems and immediately kicked off an audit. The company did not expect to meet SEC deadlines for filing the 10-K statement, putting it out of compliance with NASDAQ rules and investors are still waiting for that document.
Now what: Exactly what is going on inside comScore's accounting review is unclear, but it's unlikely to be good news. If there were positive findings to report, comScore's management would be shouting it from the tallest rooftop the SEC and NASDAQ allows. Instead, it's stony silence. I wouldn't be surprised if the company had to restate several quarters of past earnings, and the changes could be substantial.
Now, that doesn't necessarily mean that the stock is destined for an even steeper drop. After the March 7 plunge, shares are trading down 45% year over year. Investors have already baked in a lot of potential accounting damage, and the review results might actually come as a sigh of relief.
That being said, accounting issues are never good news and could point to inept or downright corrupt management teams. Not every time, of course -- honest mistakes do happen -- but it's a big red flag. There's no telling where comScore shares will go when the audit is finalized, and I'm happy to just watch the drama from the sidelines.