Account Info
Log Out
No matches yet
Operations too frequent. Please try again later.
Please check network settings and try again Refresh Refresh
History record delete
    Quotes All >
      News All >

        What is a Delisting?

        Views 30k2023.08.09

        Key Takeaways

        • Delisting means the removal of a listed stock from a stock exchange, and it can be voluntary or involuntary

        • Reasons for voluntary delisting may be mergers, takeovers, or companies wanting to go private. Apart from political factors, involuntary delisting usually means that the company failed to meet listing requirements set by an exchange, which include regulatory, financial, and trading standards

        • Delisting does not affect your ownership. In most cases, you can sell your shares in the over-the-counter market, but it may be more difficult and riskier. In some cases, you can sell your shares back to the company at a premium. And if the company gets listed on another market first, you can also convert your shares

        Understanding a delisting

        A company can be listed and can also be delisted. Delisting means the removal of listed security from a stock exchange. Once delisted, the stock can no longer be traded on that exchange unless it is listed there again.

        Delisting can be voluntary or involuntary. Voluntary delisting means that the company chooses to do so on its own. In contrast, involuntary delisting usually happens as a punishment when the company can not meet the requirements set by the exchange where it is listed.

        Involuntary delisting often shows poor financial health or poor corporate governance. On the contrary, voluntary delisting may occur for good purposes.

        In America, delisting frequently occurs,  with a large part being voluntary.

        When a company fails to meet the exchange's listing requirements, it will receive a warning from the exchange where it is listed. The warning usually comes with a deadline which gives the company some time for adjustments. If non-compliance still exists by the deadline, the exchange will delist the company's stock.

        Reasons and examples

        A stock can be delisted for various reasons.

        In voluntary delisting, reasons can be mergers, takeovers, and financial restructurings. The company may also delist to go private or reduce expenses and temporal costs for decision-making.

        For example, Burger King has delisted twice, voluntarily both times, from the New York Stock Exchange(NYSE). In 2010, it went private after being bought by 3G Capital. It was relisted two years later but merged with Tim Hortons in 2014 and got delisted again.

        Involuntary delisting happens when companies cannot comply with certain standards, including regulation violations like financial fraud and not filing reports on time. Noncompliance also involves failure to meet financial standards like pre-tax earnings, revenues, total assets, and cash flows, or trading standards like market cap and stock price.

        For example, Luckin Coffee was heatedly-discussed in 2020 because of financial fraud and ended with delisting from Nasdaq.

        In particular, a price trading below $1 per share for a specified length of time is the most common reason., which sells pet food and accessories on the Internet, was established in 1998. It was popular earlier, but its stock price fell below $1 later due to high transportation costs and marketing expenses, which eventually caused its delisting.

        In addition, some political factors may also play a role in involuntary delistings. Delistings of China Mobile, China Unicom, and China Telecom from the New York Stock Exchange are a few examples.

        Effects to investors

        What effects will delisting take on investors? Let's take the US market as an example.

        Firstly, delisting does not affect your ownership, and you still own your shares.

        If a company delists voluntarily for reasons like mergers or going private, the company generally will offer a buyback of its shares at a premium price. You can sell your shares back to the company within the given time. The repurchase can be in the form of cash or new shares.

        If you prefer not to do so or the delisted company doesn't offer a buyback,  you can often sell your shares in the over-the-counter market. However, it is more difficult for you to find the right buyer in this market. And it gets riskier, too.

        Another situation is that some delisted companies will choose to go public in another market.

        If the new listing precedes the delisting, investors can convert their shares into the new market's shares in a particular proportion so they won't be impacted much. If its delisting happens ahead of the new listing, it is similar to going private for investors.

        The information contained herein is for educational purposes only. Nothing discussed should be considered investment advice.  

        Trade like a pro with moomoo

        Get free stock and start your professional trading today

        Terms and conditions apply right-arrow

        This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeline for any particular purpose of the above content.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC)  and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our website Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.

        In Canada, order-execution only services available through the moomoo app are provided by Moomoo Financial Canada Inc., regulated by the Canadian Investment Regulatory Organization (CIRO).