Erayak Power (RAYA) shares plunge 8.25% as Nasdaq delisting looms over regulatory violations

Erayak Power (RAYA) shares tumbled 8.25% on September 9, marking a third consecutive day of declines that have erased 25.37% of the stock’s value in three trading sessions. The stock hit an all-time low intraday, with a 25.00% single-session drop, exacerbating concerns over its financial stability and regulatory compliance.

The company faces imminent delisting from Nasdaq due to prolonged violations of minimum stock price requirements. Nasdaq has determined RAYA’s shares have closed below $0.10 for ten consecutive trading days, triggering Rule 5810(c)(3)(A)(iii), and traded under $1.00 for 30 days, breaching Rule 5450(a)(1). This dual failure has expedited delisting proceedings, leaving RAYA with a narrow window to appeal to the Nasdaq Hearings Panel by September 10 to avoid a trading suspension on September 12.

RAYA’s financial struggles compound its regulatory risks. Despite a 49% year-over-year revenue increase, the company reported negative EBITDA of -$1.02 million and a heavily diluted capital structure. A recent registered direct offering raised $7 million by issuing 107.7 million shares at $0.065 each, further eroding shareholder value. The move highlights liquidity challenges and signals waning investor confidence, as the stock’s market cap has shrunk to $7.3 million.

Strategic efforts to reverse the decline remain uncertain. While RAYA has proposed a reverse stock split to artificially inflate the share price, the measure does not address underlying debt burdens or operational inefficiencies. Shareholder approval for the split is pending, but even if implemented, it may only temporarily delay delisting without resolving broader financial weaknesses. The company’s inability to maintain compliance with Nasdaq’s pricing rules underscores systemic issues that have eroded market credibility.

If delisted, RAYA’s stock would likely migrate to over-the-counter markets, where trading liquidity and investor access would diminish. This shift could trigger reputational damage, higher borrowing costs, and operational challenges in sustaining business growth. For existing shareholders, delisting risks further value erosion and limited exit opportunities, amplifying the stock’s speculative nature.

RAYA’s situation reflects broader risks for firms failing to align financial performance with regulatory standards. While the company’s focus on power solutions for industrial and outdoor markets aligns with niche demand, its capital allocation decisions and debt management practices have drawn scrutiny. The outcome of its delisting appeal and reverse split vote will determine whether RAYA can retain Nasdaq status, but the path to recovery remains fraught with structural hurdles.