Shares of BIOLASE (NASDAQ:BIOL), a company that specializes in dental lasers, was up 20% in pre-market trading after it was granted a reprieve by the Nasdaq stock exchange.
At just 47 cents a share, BIOL stock is in danger of being delisted by the Nasdaq, which requires companies to maintain a minimum share price of $1 to remain on the exchange. However, in a news release, BIOLASE announced that it has been granted a 180-day extension to regain compliance with this requirement.
What Happened With BIOL Stock
Nasdaq has told BIOLASE that it has until May 23, 2022 to get its share price above $1 and keep it there for a minimum of 10 consecutive trading days. If it can do that, it will regain compliance with the exchange and avoid being delisted. That extension buys BIOLASE some much-needed time to raise its stock from its current price.
Investors have welcomed the news, judging by the fact that BIOL stock shot up more than 20% before the opening bell. Although shares have cooled off slightly, they are still up 12% in morning trading.
BIOL stock has been on a steady decline for several years now. A publicly traded company since 1992, its stock had been trading at just under $100 per share in 2004. However, since that peak, the share price has steadily eroded. In 2013, the shares were trading at $25 and they have slid lower and lower since.
Why It Matters
The extension by Nasdaq removes some immediate uncertainty surrounding BIOL stock. It also gives the Foothill Ranch, California-based company time to improve its financials, gain the confidence of investors, and push its stock price above the $1 minimum needed to remain on the Nasdaq. It is a positive development for BIOLASE in the near term.
However, the 180-day extension by Nasdaq does not remove the longer-term issues facing the dental company or change the fact that its shares have collapsed over the last 15 years. Should BIOLASE fail to get its share price above $1 between now and May, it will be removed from the Nasdaq and likely end up trading on the over-the-counter market, also known as the pink sheets.
Trading on the over-the-counter market could impact BIOL stock’s liquidity, access to capital, and the ability of investors to access the company’s shares.
What’s Next for BIOLASE
Today’s gains are a step in the right direction for BIOL stock. But this doesn’t solve the need for BIOLASE to get its share price up above $1 and keep it there for 10 consecutive days.
The Nasdaq extension buys the company some sorely needed time, but BIOLASE will need to use that time to come up with a plan to right its ship and get its shares moving in the right direction.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
