Astute Wall Street watchers on Tuesday may have wondered what, exactly, was going on at Emmis Communications.
It appeared that Emmis’ stock, traded on the OTC Pink Sheet, had suddenly plummeted in value. On Wednesday (10/6), there was no movement.
What’s the story?
According to CEO Jeff Smulyan and General Counsel Scott Enright, who spoke with RBR+TVBR after Wednesday’s Closing Bell on Wall Street, the change in value for Emmis shares is the result of what they believe is EMMS’s “dislocation” of the regular pink sheet.
This transpired, they say, because of the adoption by the Securities and Exchange Commission of a rule that states if a company is not providing current financial information — i.e., quarterly earnings report — then the OTC cannot publicly display quotes.
This change went into effect on September 28.
And, that could explain why a steep drop to 80 cents appears to have happened overnight.
The drop in value was confirmed, but it wasn’t across a single trading session. And, the executives believe the dip in value on very low volume of some 100 shares was simply a reaction to the dislocation of EMMS from the regular pink sheet.
Today, Emmis is quoted in the “expert” market, available for certain traders but not publicly viewable on common stock apps or on websites such as Yahoo! Finance.
The very move to delist from Nasdaq, completed in May 2020, was designed to avoid quarterly earnings reports and calls. “We didn’t want to spend several million dollars on being a public company,” Smulyan says. At the time, Emmis had fewer than 300 holders of record.
And, he notes Emmis itself is fine. “There is no debt there is money in the bank. [EMMS] has not been a widely traded stock for years and years. Emmis two years ago paid off its final $1.6 billion debt and put money in the bank while making strategic acquisitions. We’re doing fine.”
