What’s going on with Ideanomics (NASDAQ:IDEX) today? IDEX stock is surging higher by more than 40% after the company announced it would transfer its interest and obligations in the Minority Depository Institution Keepers Fund to Uber (NYSE:UBER) for no additional consideration. Ideanomics had originally agreed to invest $25 million in the MDI fund over a period of three years in exchange for being made a limited partner of the fund. However, the company missed out on two required contributions that totaled over $250,000. Ideanomics has invested a total of $4.37 million in the fund.
On April 20, Nasdaq notified Ideanomics that it was in noncompliance with continued listing standards due to having a stock price of 10 cents or less for 10 consecutive trading days, or from April 5 to April 19.
Based on the most recent data, there were 83.67 million shares of IDEX sold short as of May 31. That’s equivalent to a short interest as a percentage of float of 13.3%, which would take 1.1 days to fully cover. Generally, a short interest above 10% is regarded as high, while a short interest above 20% is considered very high. At the same time, the cost to borrow (CTB) fee tallies in at 9.4%, which is higher than the average CTB fee of between 0.3% and 3%.
With that said, the risk of IDEX stock being delisted from Nasdaq remains a possibility. Let’s get into the details.
IDEX Stock: Is Ideanomics About to Get Delisted?
IDEX was set to be delisted on May 1, unless Ideanomics requested an appeal hearing before the Nasdaq Hearings Panel, which it did. While the panel makes its decision, shares of the company will remain listed on the exchange. A timetable was not provided, although generally the panel makes its decision within 30 to 45 days. That means the panel should unveil a decision any day now.
That doesn’t mean you should go ahead and chase IDEX, though. Stocks at risk of being delisted are known as extremely risky investments with a history of low prices or underperformance. In the past five years, shares of Ideanomics have fallen about 95%.
Ideanomics is also on the hook for another Nasdaq violation. On April 29, independent Director Jerry Fan resigned from the board and audit committee. However, Nasdaq requires a minimum of three independent directors on the audit committee. Nasdaq has provided Ideanomics with a “cure period” that will expire “at the earlier of the Company’s next annual meeting of stockholders or May 31, 2024.” Ideanomics plans on appointing an independent director to the board and audit committee as soon as possible and before the cure period deadline.
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On the date of publication, Eddie Pan did not hold (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.
