delist investment & finance definition
To
remove a company from a U.S. stock exchange. Exchanges delist companies if the
company’s stock falls lower than a minimum closing price, often $1, for a
certain period of time. Exchanges also have minimum market capitalization
levels.
See delist in Wall Street Words
To drop a security from trading on an organized exchange. Delisting may occur for a number of reasons including failure to meet an exchange's standards or placement of a new listing on another exchange. Compare
list.
In early 2001, Nasdaq informed Drkoop.com, a one-time high-flying Internet company, that the firm's stock was subject to being delisted from the Nasdaq Stock Market. At the time of the notice Drkoop.com stock was trading at approximately 20¢ per share, well below the $1 per share required to continue trading on the Nasdaq. Delisting can have a serious negative impact on a firm's ability to raise equity capital, since it is likely to reduce liquidity and increase the bid-ask spread quoted by dealers. Many individual investors avoid buying a delisted stock as trading volume dries up. Negatives associated with delisting are likely to cause a major decline in the market price of a stock that most likely has already experienced a major price decline. Nasdaq, which delisted 240 companies in 2000, often begins the delisting process when a stock's bid price falls below $1 per share for 30 consecutive trading days. The firm subsequently has 90 calendar days to boost its stock price above $1 per share for 10 consecutive trading days. The New York Stock Exchange has a similar price requirement plus additional minimums regarding market capitalization and shareholder equity.
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