For MGO Global, a Fort Lauderdale, Florida-based company that markets Messi-branded clothing, the situation couldn’t be better. In full force of the treaty to use his name, Argentina were crowned world champions with the help of his star. Then Lionel Messi signed with Inter Miami, sparking an unprecedented football fever in the United States. However, the company was unable to capitalize on the footballer’s fame, suffering losses and plummeting on the stock market since the inflated valuation at which it launched. Now Nasdaq has threatened to force the company out of the market after its shares collapsed.
Even a careful reading of the IPO brochure, in which Messi was mentioned more than 300 times, raised doubts as to whether the placement price reflected the value of the company. It was a small company with four employees in which its founders and shareholders had invested a total of just over four million dollars before entering the market and which had to accept repeated losses. At the stock market price of $5 per share, MGO Global was now valued at around 58 million euros. This is despite the company admitting in its IPO prospectus that there was “significant doubt” about its “ability to continue as a going concern” due to its past recurring losses.
These losses continued. While Adidas has struggled to meet the increasing demand for Inter Miami jerseys, Messi-style fashion hasn’t caught on. The company doubled its losses in the second quarter. Sales of Messi’s clothing have more than doubled, but they are so meager that they do not even cover payments to the footballer for the use of his name. In search of volume, the company has opened a new line of business selling flagpoles, but this is also loss-making.
Messi gave up his name and image in exchange for an agreement that would see him demand a royalty of 12% of MGO-billed sales of his brand’s clothing, but a minimum of four is required for a three-year contract Million euros guaranteed is not subject to automatic extension. The contract expires at the end of 2024.
After the quarterly results were released in August, the price fell and no longer raised its head. The shares will be exchanged this Tuesday at a price of $0.58 per share, which is 88% below the market price. The company is valued at just over $8 million, although it raised more than $5 million in its IPO.
Nasdaq sent a letter to the company last week saying that during the 30 consecutive business day period from September 7, 2023 to October 18, 2023, the company’s shares did not maintain the minimum closing price of one dollar required for further Trading on the Nasdaq is required on the Nasdaq Capital Market. This represents a threat of exclusion, although the company was initially granted an extendable period of 180 calendar days until April 16, 2024 to comply with this requirement again. This can theoretically be achieved by revaluing or regrouping the shares.
“If the company cannot meet the requirement again [durante los plazos concedidos]“The Company’s common shares are subject to delisting,” MGO Global admitted in a filing with the U.S. Securities and Exchange Commission (SEC). It adds that “the company is currently evaluating its options to return to compliance” but that there “can be no guarantee” that it will again comply with this rule or that it will continue to comply with any of the other listing requirements.
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