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When the market started to crap the bed last year, hundreds of public companies were faced with the prospect of delisting due to their low share prices and market caps.
Because of the unusual nature of the circumstances -- and the fact that they had much bigger problems to devote resources to -- the NYSE and Nasdaq elected not to enforce minimum share price requirements temporarily. But now that the market has rallied, what about companies that haven't been able to get their share prices back up a bit?
According to the USA Today, "At the end of 2008, 356 Nasdaq and NYSE firms traded for below $1, according to a USA TODAY analysis of data from Standard & Poor's Capital IQ. The number is half that now, 185."
What happens when companies get delisted? They have to find another exchange to list on -- former NYSE companies sometimes head to the Nasdaq, and if things are really bad, they can always check out the AMEX or the dreaded Pink Sheets.
Trading on the Pink Sheets or a minor exchange can make it impossible for some funds to own shares -- which can lead to lower share prices and reduced liquidity. For companies that need to access the capital markets to raise additional capital, delisting could well be the kiss of death.
If you're worried about stocks that you own getting delisted, you can review the NYSE listing standards and the Nasdaq listing standards.
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Reader Comments (Page 1 of 1)
10-05-2009 @ 10:36AM
Beltway Greg said...
While were delisting stocks, wow that really helps, they're running scared now, the SEC ought to bring back the uptick rule and eliminate naked short selling. The markets are being blatantly manipulated and flash trading is still in evidence. Today early on Apple dropped below $184.50 despite the market being up 50 points. What's the problem here? Who would possibly sell this stock at this level? $210.00? I can see it. But, at $185.00? Anyway see you at $200 and by that time we'll be allowed to trade each of those steps 3-4 times. It reminds me of that Air Supply song from the 80s, "Making Love Out of Nothing at All."