DallasNews Corporation (NASDAQ:DALN) is currently at risk of being delisted from the Nasdaq Stock Market due to non-compliance with the minimum stockholders' equity requirement. On Monday, the company received a notification from Nasdaq stating that it did not meet the continued listing standard after reporting negative stockholders' equity of $(576,000) for the quarter ended September 30, 2024.
The issue first arose on June 3, 2024, when Nasdaq notified DallasNews Corp that its stockholders' equity had fallen below the required $2.5 million. Despite submitting a plan to regain compliance and a subsequent improvement in operational performance that appeared to resolve the issue by July 18, 2024, the company's latest financial report has led to a renewed notice of non-compliance.
DallasNews Corp has until November 26, 2024, to appeal the decision. If no appeal is made, the suspension of trading for its Series A Common Stock will commence on November 29, 2024, followed by the formal delisting process. The company has expressed its intention to challenge the determination within the stipulated timeframe, which would automatically stay the suspension and delisting pending a decision by the Nasdaq Hearings Panel.
In other recent news, DallasNews Corporation has reported a GAAP net loss of $3.9 million in Q3 2024, a substantial increase from the previous year's $1.4 million loss. This loss is largely attributed to the company's transition to a smaller printing facility and significant headcount reductions, which led to an operating loss of $4.1 million for the quarter. Despite this, DallasNews Corp has seen an increase in digital subscription rates and digital subscribers, indicating a strategic shift towards digital platforms.
The company's digital-only subscriptions have grown by 13.5%, adding over 3,100 new digital subscribers since early September. Meanwhile, the transition to a new printing facility in Carrollton is ongoing and expected to be completed by Q1 2025. The company maintains a strong balance sheet with $11.6 million in cash.
In light of these recent developments, Medium Giant, a media buying agency, reported a 26% year-over-year revenue growth. DallasNews Corporation's focus remains on sustainable profitability and shareholder returns, with the company exploring options for proceeds from the sale of the Plano printing facility. The company's next earnings update in March 2025 will provide further insights into its financial health and strategic direction.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on DallasNews Corporation's financial situation. Despite the company's delisting risk, it's worth noting that DALN has shown a significant return over the past week, with a 14.29% price total return. This short-term performance is part of a broader trend, as the stock has seen a 56.42% price total return over the past year.
An InvestingPro Tip highlights that DALN pays a significant dividend to shareholders, with a current dividend yield of 11.11%. This high yield could be attractive to income-focused investors, but it's important to consider the sustainability of such payments given the company's financial challenges.
Another relevant InvestingPro Tip indicates that DALN is quickly burning through cash, which aligns with the negative stockholders' equity situation mentioned in the article. This cash burn rate could be a critical factor in the company's ability to address its compliance issues with Nasdaq.
For investors seeking a more comprehensive analysis, InvestingPro offers 9 additional tips for DALN, providing a deeper understanding of the company's financial health and market position.
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