Publicly traded Hall of Fame Resort & Entertainment appears likely to beat a Nasdaq countdown that threatens to delist the stock of the football-themed business next month.
Shares of Hall of Fame, which trade under the ticker HOFV, have suffered mightily since the business went public by a SPAC merger in June 2020. After debuting at $12.30 and enjoying periods of strong investor interest through last year, shares fell below $1 in February. The cause is primarily due to the bear market, which tends to have outsized effects on smaller stocks like Hall of Fame Resort. The Nasdaq Composite Index is down 34% from its November peak.
Financially, Hall of Fame—which develops football-themed content and real estate adjacent to the Pro Football Hall of Fame in Canton, Ohio—has been weathering the downturn just fine. But having its stock trade under $1 for more than 30 days is a problem, because it puts the company out of compliance with the Nasdaq’s listing requirements. In May, Nasdaq gave the Hall of Fame six months to get its stock to close above a buck for at least 10 straight days. If it can’t, the company could convince Nasdaq to give a half-year extension—or it could be kicked off the exchange.
Hall of Fame isn’t alone. Another 372 companies are out of compliance with the Nasdaq listing requirements, mostly for low share prices, according to the exchange.
“We’ve been near regaining compliance but then as the market downturns, we continued to get pulled with it,” Eric Hess, vice president of finance at the company, said in a phone call. In August, Hall of Fame shares narrowly missed regaining compliance, closing eight straight days over $1 before slipping. Recently, the stock has traded as low as 53 cents.
But the company has pursued two options that should keep Hall of Fame Resort on the Nasdaq. For one, the company has already filed for an extension with the exchange. In that case, another six months presumably could allow the bear market to ease and for investors to start elevating the share price again. If Nasdaq follow its usual pattern, however, it won’t tell Hall of Fame if it approves or not until its Nov. 21 deadline is nearly up. As a backup plan, the company has secured shareholder approval for a reverse stock split, according to Hess. In that move, existing shares are combined and should result in fewer shares, with a price over $1. “We’re going through all the steps and doing all the stuff that we need to do to remain compliant… and letting the Nasdaq know we are serious about getting compliant,” said Hess.
Staying on the Nasdaq is vitally important for the business, which says it can grow annual sales to $150 million by 2026—up from about $11 million last year. Growth will come from adding more events (it hosted the USFL finals this year), opening a retail mall (hall of famer Isaac Bruce owns a Smoosh cookie franchise opening on company property), and producing media, like The Perfect 10, a series coming to Fox Sports profiling the 10 Heisman Trophy winners who also are enshrined in Canton.
To use a sports metaphor, a demotion from the majors to the bush leagues—which for stocks is the Over The Counter “pink sheets” market—can be the start of a death spiral. Many institutional investors can’t own OTC stocks, and many retail investors don’t want to own them. That makes the ability to raise money for corporate activities by issuing more stock even harder.
“Our goal and our obligation to our shareholders is to give them a trading environment that is easy, easily accessible, that has liquidity, that’s being traded,” said chairman and CEO Michael Crawford during an investor call in August. “And to be removed from the Nasdaq into a pink sheet environment would complicate that and make it much, much more difficult.”