TuSimple shares could vanish from the Nasdaq within 15 days because the one-time leader in autonomous trucking software has failed to file two corporate financial reports for 2022.
The company appealed the May 5 delisting notice on Thursday. That automatically stayed Monday’s scheduled delisting for 15 calendar days. TuSimple is asking to keep the stay in place while the appeal is pending.
The threat of delisting is the latest setback for the San Diego-based startup. TuSimple led the way to public trading among autonomous trucking software competitor. Its April 2021 initial public offering was priced at $40 a share.
Reputation damage takes its toll on TuSimple
Investors have shunned the stock amid a series of blunders that included messy boardroom politics. Co-founder Xiaodi Hou ousted CEO Cheng Lu in a surprise “succession” in March 2022. Lu returned as CEO in November after independent directors fired Hou. The directors themselves were fired the same day Lu returned.
The reputation damage cost TuSimple continuation of a two-year manufacturing partnership with Traton Group’s Navistar Inc. in December. The Lisle, Illinois, truck manufacturer was co-developing a purpose-built chassis for TuSimple’s driverless software.
TuSimple began pilot tests of its “driver out” software in December 2021. It plans a limited commercial offering on a route between Tucson, Arizona, and Phoenix by late 2024.
KPMG resignation left TuSimple in a bind
KPMG quit as TuSimple’s auditor in September, also for reputation concerns, just before the planned release of third-quarter 2022 results.
“Even though my 10-Q is ready to go and to be filed, we cannot file it without an auditor,” TuSimple CFO Eric Tapia told FreightWaves in a March interview. “They just didn’t want to get associated with TuSimple because we were deemed high risk, but there’s no questions about our financials.”
During the interview, Tapia indicated an auditor hiring was imminent with the May deadline looming.
The lack of a 10-Q report and the year-end 10-K for 2022 led Nasdaq to its May 5 decision to delist TuSimple. The company was denied an extension.
“The Notice indicated that unless the Company appeals the delisting determination, which it intends to do, trading of the Company’s common stock will be suspended” Monday, TuSimple said in a statement Thursday.
On Wednesday, TuSimple hired London, U.K.-based UHY, a network of accounting firms with 32 offices in eight states, as its new auditor.
“We believe that selecting and engaging a new independent registered public accounting firm is an important step,” the company said. “The company is working expeditiously on a detailed plan to present to the hearings panel in an effort to regain compliance with the listing rule.”
What happens to shareholders when a company is delisted?
Sharholders typically have a harder time trading a delisted company’s stock. TuSimple will trade over the counter, also known as the pink sheets. They have loose listing requirements and feature highly speculative penny stocks.
After trading at one time near $70 a share, TuSimple shares fell under $1 last week, closing Friday at 83 cents as investors shaved 25% of its already-depressed value over the last five trading sessions.
TuSimple “closed the year with close to a billion dollars in our balance sheet,” Tapia said.
The company issued a shareholder letter and filed an 8-K with the Securities and Exchange Commission for Q3.
TuSimple laid off 350 employees — a quarter of its workforce — in December as part of a restructuring. The focus now is on research and development instead of autonomous freight hauling with safety drivers that cost more than the revenue it generated.
Editor’s note: Corrects that delisting scheduled Monday was automatically stayed for 15 calendar days because TuSimple appealed.
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