Key points:
- Created is about to lose its NASDAQ quote
- CRTD stock is down 45% in two days on the back of this
- The likely solution is a capital raise, but how dilutive will that be?
Creatd (NASDAQ: CRTD) has decided to wave bye bye to its NASDAQ listing. The CRTD stock has also fallen 45% just yesterday and premarket this morning. The two are indeed linked as there's no other news about Creatd at present. One lesson of which is that we can now see, from this Creatd example, what the value of a NASDAQ listing actually is. A reasonable and fair old sum that is.
As to what Creatd does its core product is Vocal. Which is a sort of creator community, a place where people can try their hand at writing articles and getting them published. As you might expect a freelance writer has had a look and, well, isn't greatly impressed. Not as a business adventure at least. There seems to be much too much overhead, management, for the volume of what happens there. That's just an impression rather than a formal analysis of course.
There's also the underlying philosophy, which is to expand out from that core and pick up items that can be marketed through that audience chain, marketed to the community. It's not entirely obvious that the community at Vocal is of a size to make that worthwhile but then such things can at least be tried. For example Creatd bought into Orbit Media, a stock trading social app. Quite how well that's going to go over to would be freelance writers at early career stages – the Vocal audience – isn't entirely obvious.
Also Read: Social Trading The Easy Beginners' Guide
The more specific problem though is that NASDAQ has just cancelled the listing. The normal reason for this is being under the $1 minimum offer price limit for 180 days or more. The normal solution to that is to have a reverse stock split. However, Creatd's problem isn't – although it also has this problem – that minimum offer price for CRTD stock. Rather, you also need to have $2.5 million of stockholders' equity within the company to maintain the NASDAQ listing. And Creatd doesn't have that.
So, wave bye bye to NASDAQ then. Unless something else can be done of course and of course something else can be done. Creatd is insisting that their upcoming capital raise is just about to arrive and so it will bounce back onto NASDAQ near immediately. The stay down in the OTC markets will be short even if not particularly sweet.
As for us as traders there are therefore two reasons to be wary of Creatd stock. One is the vanishing – even if temporarily – of the NASDAQ quote. That means the much lower liquidity of the OTC markets. More than that though we are now faced with a capital raise and it does have to be capital, loans won't do the trick. But the lower the Creatd stock price goes then the more dilution there will be for any particular amount of capital raise. It's possible that the terms won't be too onerous – but that's probably what to look out for as a trigger for any revival in the Creatd stock price.
