May 17, 2011 | In: General

When Is a Stock Delisted?

I have never traded AIB, but for some reason, I feel that this stock should not be listed. So I started wondering, how does a stock get delisted from the stock exchange?

Apparently, the delisting rules and procedures are different between the NYSE and the NASDAQ, but they both share one common rule: A stock should never have a bid value below $1 for a period of more than 30 trading days. Failing that, the company is officially that it will risk being delisted if it doesn’t get the stock price over $1 within 6 months after receiving the notification. Note that in some cases, if the NYSE or the NASDAQ notice that short-selling is blocking the stock price to go over $1, then they can block short selling for that particular stock.

There are many (and I mean many) other rules that the company has to conform to to maintain presence in the stock exchange, for example, in case of the NYSE, the company must have at least 400 shareholders or 600,000 publicly held shares (of course, there are many other rules that the company has to abide to in order to maintain its listing). As for the NASDAQ, the company must have at least 300 shareholders and at least 500,000 publicly held shares (again, there are other applicable rules).

Going back to AIB, I believe there will be a reverse split (5:1) in the near future. I guess sooner or later, and if they keep doing these reverse splits, the stock will not even have 5 shares to be reverse split. The stock has fallen nearly 18% so far this month. Watch how the stock will fall another 18% till the end of the month. Oh, and the short ratio is 0.3 (not high at all, so never expect a short squeeze).

References

- NYSE Listing Rules
- NASDAQ Listing Rules

7 Responses to When Is a Stock Delisted?

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What Is a Penny Stock? « Fadi El-Eter

July 1st, 2011 at 5:55 am

[...] that it’s any stock that is below $1, then bear in mind that both the NYSE and the NASDAQ will delist a stock that trades below a $1 for more than 1 month) then yes, penny stocks are very dangerous. The [...]

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Are Reverse Splits Good for Stocks? « Fadi El-Eter

July 13th, 2011 at 12:25 am

[...] drop below the $1 level for more than a month. Failing to comply with this rule can cause the stock to be delisted. Companies do a reverse split in order to avoid getting kicked out of the [...]

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IRE (Bank of Ireland) Reverse Split Soon « Fadi El-Eter

July 14th, 2011 at 2:58 pm

[...] (NYSE:IRE) has dropped yesterday below the $1 level, and is currently trading at $0.91. As we already know, NYSE (as well as NASDAQ) rules require that the stock maintains a price above $1 dollar at all [...]

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AIB: Another Reverse Split « Fadi El-Eter

August 19th, 2011 at 8:04 pm

[...] plc.) has been trading for less than a dollar for more than 10 days already. Now we know that a stock will be delisted from the NYSE if it trades for less than a dollar for over a month (apparently, NYSE does not like [...]

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When Is a Stock Split Most Likely to Occur? « Fadi El-Eter

August 20th, 2011 at 11:49 am

[...] its price level. – The stock has dropped below the $1 level, which is below the minimum amount to remain listed in the NYSE and the NASDAQ. This is when a reverse split happens. – The company discovers that it [...]

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What Happens When a Stock Gets Delisted? « Fadi El-Eter

August 29th, 2011 at 8:05 am

[...] company can no longer maintain the listing requirements. This typically means that the stock has dropped below the $1 level for an extended period of [...]

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The Most Hated Stocks « Fadi El-Eter

January 11th, 2012 at 6:20 pm

[...] and it was really hated by the investors then. And then, for obvious reasons, the stock got de-listed from the stock market (which was the right thing). The stock then was re-listed back in November 2010. The problem is, [...]

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