Anghami's Share Price Plunge Raises Delisting Concerns on NASDAQ

Anghami, the leading streaming platform in the Middle East and North Africa, hit a historic milestone last year by becoming the first Arab tech company to be listed on the NASDAQ (America). This milestone is now being overshadowed as Anghami faces threat of being delisted due to the continuous fall of its share price; which violates NASDAQ’s listing rules.

What It Means to Be Listed on the NASDAQ

Once a company is listed on NASDAQ, its shares become publicly available for trading by investors through brokerage accounts. Investors have the opportunity to buy shares if they believe the company will perform well or sell shares if they decide to exit their investment. Listing on NASDAQ is like setting up shop in a large marketplace, creating avenues for growth, and attracting potential investors. Only companies that meet certain criteria are eligible to be listed on NASDAQ.

See also: Kenyan-based streaming platform Mdundo, listed on Denmark's Nasdaq First North Growth Market exchange

The NASDAQ imposes certain regulations that necessitate listed companies to maintain a minimum share price of USD $1. If the share price remains below this threshold for 30 consecutive days, the exchange initiates a review of the listed company which can ultimately lead to delisting. 

Initially, Anghami’s share price experienced a commendable surge on its first day of trading, reaching 82% and hovering around $18 per share. However, it soon began a prolonged decline that led to its share price dropping below the $1 mark in August. Currently, Anghami shares are being traded at $0.98. As a result, its market capitalization now stands at around a tenth of its $220 million valuation at the time of the listing.

What Keeps a Company’s Share Price Low?

It ranges between a lot of things.

• If a company consistently shows weak financial performance, such as low revenue growth or declining profitability, it may deter investors from buying its shares, leading to a lower share price.

• If there are concerns about the company's management, governance issues, or a lack of clear long-term strategy, investors may be hesitant to invest, putting downward pressure on the share price.

• External factors like economic downturns, industry-wide challenges, or increased competition can also result in a lower share price for a company.

• If there is a general lack of investor confidence or negative market sentiment towards the company, it can further push the share price down.

The recent developments surrounding Anghami highlight a significant downtrend in the market for the company. Anghami made its debut on the NASDAQ in February 2022, following a SPAC merger with Vistas Media Acquisition Company (VMAC), which valued the company at $220 million.

What Does a SPAC Merger Mean?

This is when a Special Purpose Acquisition Company (SPAC) combines with a private company, taking it public without going through the traditional Initial Public Offering (IPO) route. The SPAC, a publicly traded entity created solely for this purpose, raises capital through an IPO with the intention of identifying and merging with a private company, providing it with access to public markets and the benefits of being a publicly traded company.

In Aghami’s case, they have a 180-day window to regain compliance under NASDAQ’s rules. If their share price closes above $1 for a continuous stretch of 10 days within that period, the NASDAQ will consider the matter resolved. However, should the situation persist beyond the 180-day compliance period, Anghami will explore available options to correct the deficiency and regain compliance with the minimum bid requirement. This may involve considering measures such as approving a reverse share split. Anghami, however, keeps emphasizing the utmost importance of maintaining its NASDAQ listing as a key priority for the company.

What It Means to Reverse Share Split

This usually happens when a company's share price is down. It means that the company will consolidate its existing shares into a smaller number. For instance, in a reverse split, multiple shares might be combined into a single share. The purpose of this is to artificially increase the share price by reducing the number of outstanding shares.

While a reverse split may result in a higher per-share price, it doesn't inherently change the company's overall value or alter the market capitalization. This move is often taken by companies as a strategic decision to meet certain requirements for maintaining their stock exchange listing or to attract investors who may perceive a higher share price as an indicator of value or stability. However, it's important to note that a reverse split does not guarantee long-term share price appreciation or financial success for the company.

Launched in 2012, Anghami is revered as one of the earliest, most established, and fastest-growing music technology platforms in the Middle East and North Africa (MENA) region. It boasts a user-base of approximately 120 million registered users, with around 1.52 million paying subscribers as of 2022. With offices in Abu Dhabi, Beirut, Dubai, Cairo, and Riyadh, Anghami operates in 16 MENA countries and offers the largest digital music catalog in the region, featuring over 100 million licensed songs and other content.

In 2022, Anghami reported a year-on-year increase of 35.6% in revenue, reaching $48.1 million, accompanied by a 21% year-on-year growth in total paying subscribers.