Asian food company DDC falls further amid proposed reverse stock split to avoid delisting

Shares of Hong Kong-based ready meal maker DayDayCook (DDC), with a market capitalization on the New York Stock Exchange (NYSE) barely exceeding $4.5 million, slid over 8% on Friday, November 1. This came after an announced shareholder meeting to vote on a reverse stock split and an increase in the number of shares to maintain its listing on the exchange.

Details

DDC shares fell 8.3% on the NYSE on Friday to close at $0.21. The company has lost nearly 98% of its market value since going public just under a year ago.

After markets closed on Thursday, October 31, DDC announced it had filed a notice with the U.S. SEC for an extraordinary shareholder meeting, scheduled for November 29, to get approval for a 1-for-25 reverse stock split. The company is thus trying to raise its share price to meet the NYSE’s $1 per share minimum requirement. If it fails to regain compliance, DDC could be delisted and relegated to the over-the-counter market, which, because it is less liquid, might discourage brokers from effecting transactions and potentially trigger further price declines, the company warns.

Additionally, DDC is proposing to raise its authorized share count from around 31 million to 200 million. This would be an increase of approximately 550% before the share consolidation and 16,050% after.

Context

DDC, based in Hong Kong, makes and sells ready-made Asian dishes and other products, like sauces. In November 2023, the company went public with an IPO on the NYSE, which failed to excite investors. The IPO price was $8.50 per share, 10% below the lower end of the price range indicated in the prospectus. By early December, DDC stock had dropped about 30%.  To support the share price, DDC announced plans to repurchase up to 500,000 shares within a year.

However, the challenges did not end there. In May 2024, DDC was notified by the NYSE of noncompliance with another listing rule, for failing to file its 2023 annual report on time, and given six months to file. Then, in July, the company reported that the NYSE had accepted its plan to regain compliance by October 23, 2025, subject to quarterly monitoring.

Analyst insights

According to MarketWatch, DDC is currently tracked by a single analyst, who has a “buy” recommendation at a target price of $7.12 per share.