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).