How To Play comScore's Possible Delisting

Traders and investors who looked at comScore, Inc.'s SCOR price action Tuesday may have gotten a subtle trading idea: play the stock's possible February 8 delisting.

comScore shares opened down nearly 10 percent Tuesday morning, only to rebound sharply by noon. At one point, the stock traded up more than 5 percent. Heading into the last few minutes of trade, comScore shares traded down about 1.5 percent.

The News

Tuesday's volatility follows a nearly 30 percent decline in comScore on Monday as the company announced it notified the Nasdaq Hearings Panel it would be unable to regain compliance with the SEC's periodic reporting requirements by the February 23, 2017 deadline.

comScore had fallen out of Nasdaq compliance early September 2016 after a delay in the company's Form 10-K filing with the SEC. As of November 15, 2016, comScore announced it received notice of added deficiency from the Nasdaq Listing Qualifications staff given the company's delay also for its 10-Q filing.

"As a result of the updated timing, comScore's common stock may be suspended from trading and delisted from Nasdaq," Tuesday's press release said. "If the Panel makes such a determination, the Company intends to file an appeal with the Nasdaq Listing and Hearing Review Council requesting that the Listing Council stay any Panel action to suspend comScore's listing and consider providing comScore with additional time to complete the restatement process while remaining listed on Nasdaq."

comScore said if common shares trading on the Nasdaq were delisted, the company intends for shares to be quoted on the OTC Markets.

The Opportunity

While the 30 percent move lower on Monday and added move lower on Tuesday seemed like the market accounting for the delisting, if comScore was indeed forced to trade OTC, many fund managers would need to liquidate holdings. Most institutions have rules preventing managers from owning OTC -- or Pink Sheet -- listed stocks.

Adding to the story, comScore was removed from the Russell 2000 index as of Tuesday's close; comScore will also be removed from the S&P MidCap 400.

As a case in point, one trader highlighted to Benzinga about 3.3 million shares of comScore were listed for sale at the close, likely ahead of the Russell 2000 index removal.

comScore shares were indicated another 0.7 percent lower in Tuesday's post-market trade, around $22.70.