So-Young's Strategic Move: Nasdaq Capital Market Transfer and Extended Compliance Period

So-Young International Inc. (NASDAQ: SY), the leading social community in China for medical aesthetics, has received approval to transfer its listing from the Nasdaq Global Market to the Nasdaq Capital Market. This strategic move, announced on February 27, 2025, comes after the company faced a non-compliance issue with Nasdaq's minimum bid price requirement. The transfer is expected to take effect at the opening of business on the same day, with no impact on the trading of So-Young's American depositary shares (ADSs), which will continue to trade under the symbol 'SY'.

The transfer to the Nasdaq Capital Market offers So-Young several strategic advantages. Firstly, the Nasdaq Capital Market operates in substantially the same manner as the Nasdaq Global Market, allowing So-Young to maintain its listing without any impact on trading in its ADSs. This continuity ensures that the company can continue to access the capital markets and attract investors.

Secondly, the transfer grants So-Young an additional 180-day period, until August 25, 2025, to regain compliance with the minimum bid price requirement. This extended grace period provides the company with more time to implement strategies to increase its ADS price and meet the $1.00 per ADS threshold for at least 10 consecutive business days.

Lastly, the Nasdaq Capital Market has less stringent listing requirements compared to the Nasdaq Global Market. This could potentially make it easier for So-Young to maintain its listing and focus on addressing the minimum bid price deficiency. By leveraging these advantages, So-Young can actively monitor its ADS price, consider other options to cure the deficiency, and work towards regaining compliance with the Nasdaq Listing Rule 5450(a)(1).



The extension of the minimum bid price compliance period impacts So-Young's financial planning and risk management strategies in several ways. Firstly, the additional time allows So-Young to implement strategies to increase its ADS price without the immediate risk of delisting. This extra time also provides the company with potential cost savings, as delisting from Nasdaq would have incurred significant costs, including legal and administrative fees, as well as potential reputational damage.

Moreover, the extension reduces the risk of a forced reverse stock split, which could have been required if So-Young did not regain compliance within the initial 180-day period. A reverse stock split can be costly and may negatively impact shareholder value and market perception. With the extended period, So-Young can allocate resources more effectively, focusing on initiatives that drive ADS price growth rather than immediate delisting avoidance. This flexibility allows the company to plan and execute strategies that may take time to show results, such as improving financial performance or enhancing investor relations.

However, the extension also presents risks. If So-Young fails to regain compliance within the extended period, it may face difficulties in raising capital through public markets. The company must focus on regaining compliance and addressing the underlying issues that led to the non-compliance in the first place.

To actively monitor and potentially increase the closing bid price of its ADSs, So-Young can take several specific actions. Firstly, the company can focus on enhancing its financial performance by implementing strategies that drive revenue growth and improve profitability. This could involve expanding its user base, increasing engagement on its platform, and exploring new revenue streams. By demonstrating strong financial performance, the company can attract more investors and increase demand for its ADSs, thereby boosting the closing bid price.

Secondly, So-Young can take steps to strengthen its corporate governance by improving transparency, accountability, and disclosure practices. This can help build investor confidence and potentially increase the demand for its ADSs. Additionally, the company can proactively engage with investors and analysts to share its vision, strategies, and progress. By effectively communicating its growth prospects and addressing any concerns, the company can help shape a positive narrative around its stock, which may attract more investors and increase demand for its ADSs.

Lastly, if the closing bid price of So-Young's ADSs remains below $1.00, the company may need to consider a reverse stock split to meet the minimum bid price requirement. A reverse stock split can increase the price per share by reducing the number of outstanding shares, which may help the company regain compliance with Nasdaq's listing rules. However, it's essential to weigh the potential benefits against the dilution of shareholder ownership and the potential impact on the company's long-term financial health.

In conclusion, So-Young's transfer to the Nasdaq Capital Market and the extension of the minimum bid price compliance period offer the company strategic advantages and time to address the non-compliance issue. By leveraging these advantages and implementing effective strategies, So-Young can actively monitor and potentially increase the closing bid price of its ADSs, ultimately enhancing its long-term financial health. However, the company must remain vigilant and address the underlying issues to avoid potential risks and maintain its listing on the Nasdaq Capital Market.