Delisting

Delisting is the removal of a company's stock from an exchange like the NYSE or Nasdaq, after which it stops trading there. It can happen involuntarily, most often because a company fails to meet an exchange's minimum listing requirements, such as a minimum share price, market capitalization, or number of shareholders, or because the company files for bankruptcy.

Delisting can also be voluntary, for example when a company is acquired and its shares are no longer needed to trade publicly, or when it goes private and chooses to stop meeting exchange and SEC reporting requirements altogether. In both cases the stock simply ceases to exist as a listed security on that exchange.

For investors, delisting is usually a serious warning sign when it happens involuntarily, since a stock that falls off a major exchange typically continues trading, if at all, on the over-the-counter market or pink sheets, where liquidity is much thinner, spreads are wider, and many institutional investors are barred by their own mandates from holding OTC stocks. A company that receives a delisting warning is given a period to regain compliance, often by improving its share price through a reverse stock split, but failing to do so pushes the stock down to a much less liquid and less visible corner of the market.