ShmoopTube

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finance a la shmoop what does it mean to delist? well when you list your company

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you are listing it on the big board this thing or at least having it show up in [Companys shown as a list on a screen]

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the list of publicly traded stocks on some exchange somewhere you know like

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this list think listing good...de- listing probably very bad delisting

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happens in one of two ways either an already existing public company gets

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bought by an even larger company and it no longer trades is a separate

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standalone security so its ticker symbol has taken off the exchange and la-dee-da [Company name removed from stock board]

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it's done that's good but delisting also happens when a company's stock price is

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so low that it can't trade as a standalone company anymore meaning that

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it comes to trade at a minimum threshold of an exchange like below $1 a share

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yeah breaking the buck there is a little different with equities but it's a bad

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thing why is this a problem well if buyers

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want to buy a stock there's a given amount of administration and overhead

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and legal things that have to be done that cost money so if that minimum fixed

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cost is something like four or five cents a share

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then at $1 it costs four or five percent of the investment each time those shares

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are traded right like that's at a buck a share each and it gets worse as the [Arrow points to share price]

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stock falls further below a dollar so to fight delisting companies often do

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reverse splits that is if they had two hundred million shares outstanding and

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we're gonna get delisted trading at $1 a share while they might do a one for ten

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reverse split such that after this reverse split the company has only 20

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million shares outstanding but they're trading now at about ten bucks a share

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it's not a great way to go investors usually hate things like that [People arguing over shares]

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and would likely sell down the stock on the announcement but keeping the stock

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well above a buck a share keeps the delisting demons at bay [Man stood in the street and demons float around him]

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at least for a while

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