7:47 am, January 4, 2023
The New York Stock Exchange has suspended trading in Cazoo warrants and has started delisting proceedings.
Trading in the online used car dealer’s warrants – ticker symbol CZOO WS – were ‘suspended immediately’, the NYSE announced at the close of business yesterday in the States.
Trading in the company’s Class A ordinary shares – ticker symbol CZOO – will continue on the NYSE.
The company’s share price was up 13 per cent yesterday to 18 cents. However, shares have fallen 96.5 per cent in the last 12 months.
Cazoo currently has a market cap of just £110m. It was valued at £6.5bn when founder Alex Chesterman launched it on the Stock Exchange in August 2021.
Warrants give the holder the right to purchase stock at a set price and at a specific date in the future.
They are issued directly by the company and when a holder exercises a stock warrant, the shares are not received from another investor but directly from the firm.
NYSE said in a statement on Business Wire that the warrants were ‘no longer suitable for listing based on abnormally low price levels’.
The statement said: ‘The New York Stock Exchange announced today that the staff of NYSE Regulation has determined to commence proceedings to delist the warrants of Cazoo Group Ltd, each whole warrant exercisable for one Class A ordinary share — ticker symbol CZOO WS — from the NYSE.
‘Trading in the company’s warrants will be suspended immediately.
‘Trading in the company’s Class A ordinary shares — ticker symbol CZOO — will continue on the NYSE.’
Cazoo can appeal the decision.
Mike Jones, automotive industry analyst and compiler of the Car Dealer Top 100 list, said this ‘doesn’t look good’.
‘When Cazoo listed they issued a large number of warrants as part of that process and these could be traded like the shares,’ Jones said.
‘They effectively said the warrant holders could buy the shares at say $11 but they are currently trading at 18 cents, so they wouldn’t be exercised.
‘Cazoo has been told they need to improve their share price or they will fall out of the NYSE completely. That’s the bigger issue.
‘This doesn’t really change things for Cazoo – they still need to start generating a profit before their cash pile runs out.’
David Kendrick, partner at UHY Hacker Young, said he thinks the issue could be more to do with any new warrants issued.
‘There have been a number of new senior management changes and perhaps new warrants issued were at discounted prices which has concerned the NYSE,’ he said.
‘Whatever the reason, this doesn’t look good. Is it the beginning of the end for Cazoo?
‘Confidence in the business will certainly be knocked. The announcement implies that the NYSE is worried about the business.’
A stock market expert told Car Dealer that there could also be a ‘technical anti dilution issue’ with the share price being so low.
A spokesperson for Cazoo told Car Dealer: ‘The recent New York Stock Exchange announcement relates only to the delisting of warrants of Cazoo Group Ltd under the ticker symbol of CZOO WS.
‘The warrants are being delisted due to the low price and volume trading levels. The listing status of our warrants does not impact the company’s Class A ordinary shares under the ticker symbol CZOO in any way which will continue to trade on the NYSE as normal.’
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