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What Happens When My Stock Is Delisted?

Still, as a shareholder, having your company delisted can have severe effects on your portfolio . Obviously, most companies that are delisted were in dire straits to begin with, but the act of delisting can actually force their stock prices to decrease further.

While the intrinsic value of the stock hasn't changed since the day before the stock was delisted, the very fact that it was ejected from its exchange is enough to make the market factors push its price even further below water. That stock that you once paid your hard-earned cash for is likely pretty close to worthless now.

When you own a delisted stock, cutting your losses might seem like a good move. But unless your holdings represent a large amount of money to you, it might not be worth the brokerage fees and time to sell.

Besides, if you still believe that your company's performance will head back up, remember that companies can become listed again after they meet the exchange's listing requirements once again. Needless to say, a company making its way back up from trading over the counter will have a lot of investor confidence to regain. Because of this, it's not uncommon for companies to rebrand themselves (with a new name or management team, perhaps) before relisting.

Investor Beware

Delisting is rarely a nice situation for most public companies, and it's especially unpleasant if you happen to be a shareholder. Be wary of companies that appear to be close to falling below the minimum continuing listing requirements of the exchange they trade on -- unless you're in a position to benefit from their collapse.

Companies get delisted each year, but this occurrence is infrequent enough that there's a good chance you won't come across it in your own holdings.

Jonas Elmerraji is the founder and publisher of Growfolio.com, an online business magazine for young investors.
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