The New York Stock Exchange plans to delist China-focused classical music licensing and streaming company Kuke after a precipitous drop in its stock price.
The NYSE and Kuke announced on Tuesday (October 21) that Kuke Music Holding Ltd., which traded under the stock ticker KUKE, would stop trading immediately.
Under NYSE regulations, a stock whose value falls below $1 per share for more than 30 trading days can be delisted. Kuke shares had been trading below that level since late September, having fallen some 85% since the start of the year.
The stock had been trading around $0.60 per share before the delisting announcement on Monday, but shot up after the news broke, closing at $1.39. That gives Kuke Music Holding a market valuation of $1.31 billion.
The NYSE also noted that Beijing-headquartered Kuke had changed the ratio of its Class A ordinary shares to American Depositary Shares (ADSs), which traded on the NYSE, suggesting that the company had masked an even larger decline in its market value through a reverse stock split. The ADSs had originally been equivalent to 10 ordinary shares.
Kuke has the right to appeal the delisting with the NYSE’s Committee of the Board of Directors, the exchange said in a statement.
Founded in 2002 by Hu Ye, Kuke started trading on the NYSE in January 2021 under the ticker KUKE, raising $50 million. It ran into regulatory problems due to a sliding stock price the following year, but was able to lift the price above $1 to avoid delisting at the time.
According to InvestingPro, Kuke is facing “significant liquidity challenges” and its financial health is rated as “weak.”
Kuke reported a massive drop in revenue in 2024, falling nearly 36% year-over-year to RMB 68.92 million, or USD $9.59 million at the average exchange rate for 2024.
The company’s EBITDA, which has been running negative for years, came in at -$5.86 million for 2024.
Kuke was sued last year by classical music label group Naxos over $1.8 million in alleged non-payment of licensing fees. Earlier this year, Kuke announced it had acquired a controlling stake in Nashville-headquartered Naxos.
“This strategic acquisition of Naxos Music Group represents a landmark transaction that will significantly enhance our position as a leading classical music services platform,” Kuke Chairman and CEO Peixian Tan said.
However, Naxos co-founders Klaus Heymann and Takako Nishizaki have reportedly disputed this, saying that Kuke’s announcement didn’t “contain the whole truth.” They asserted that there is an ongoing dispute over how Kuke carried out its acquisition of Naxos.
According to reports, Kuke had acquired control of Naxos through transactions with Naxos One Holding Limited, a shareholder in Naxos Music Group, and through transactions with Desun One Holding Limited, a shareholder in Naxos One.
Heymann and Nishizaki said Naxos had determined in August that it would stop licensing music to Kuke, and that its tracks were to disappear from Kuke’s streaming service as of October 1.Music Business Worldwide
