What Happens When My Stock Is Delisted?
Editor's note: Ask TheStreet is designed to answer questions about the market, terms, strategies and investment methods. Please email us to ask a question, but keep in mind that we cannot offer specific investment- or stock-related advice.
I would like to know what happens to the shares I hold in a company that got delisted from the Nasdaq. -- G.
When your stock gets delisted, or booted from the stock exchange that it's traded on, there's no question that things could be better. Regardless of the reason for the company's delisting, the fact that it got kicked off their exchange is something that you should be very concerned with as a shareholder .
Is Delisting Ever Good?Believe it or not, in and of itself, getting delisted from a stock exchange isn't a bad thing -- that is, when the company delists by choice. There are a couple of reasons why a company would choose to delist itself from the exchange it trades on. While going public is considered by many to be the pinnacle of success for a company (see IPO ), in many cases going private is actually a good thing (see private equity ). How? Going private consolidates ownership in a company and can actually put the company in a better financial situation than it once was in. Since going private generally suggests that another party has bought out a company's outstanding shares , most people never encounter this type of delisting situation. Corporate restructuring can be another positive reason for delisting: Companies often change names as the result of a merger or acquisition , and sometimes companies choose to move to another major exchange. In either of these cases, delisting wouldn't be a reason for alarm.
The Ugly Side of DelistingMore often than not, when a company gets delisted, it's a result of bad things, not good ones. Companies can be (and frequently are) delisted for failing to maintain the requirements set forth by their exchange. Some of these requirements are based on a company's ability to meet filing deadlines, while others relate to the company's performance in the stock market.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV