Investing Assets & Markets Stocks What Is a Delisted Stock? By Joshua Kennon Joshua Kennon Twitter Website Joshua Kennon is an expert on investing, assets and markets, and retirement planning. He is the managing director and co-founder of Kennon-Green & Co., an asset management firm. learn about our editorial policies Updated on December 6, 2021 Reviewed by JeFreda R. Brown Reviewed by JeFreda R. Brown Facebook Instagram Twitter JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career. She is the CEO of Xaris Financial Enterprises and a course facilitator for Cornell University. learn about our financial review board In This Article View All In This Article Definition and Example of a Delisted Stock How Does Delisting a Stock Work? Types of Delistings What It Means for Individual Investors Photo: Mario Tama / Getty Images Definition A delisted stock is a security that can no longer be traded on that exchange because a company no longer meets the exchange's listing standards. Key Takeaways Stocks are involuntarily delisted when the issuer fails to meet and maintain the listing standards of the exchange it is listed on.Stocks are voluntarily delisted from exchanges by the issuers for various reasons.When a stock you own is delisted from a major exchange, you still own it, and the value doesn't change unless the issuer is going private or the stock's price drops.Delisted stocks usually move to over-the-counter trading through market makers. Definition and Example of a Delisted Stock Stocks can be removed from an exchange's list of tradeable stocks. The removal of a stock from an exchange is known as "delisting." The procedure happens when a stock doesn't meet the exchange's requirements, or a company chooses not to be publicly traded anymore. A stock would be delisted if the issuing company were to fail to meet the minimum standards set by the exchange it was listed on. For example, if ABC Company was listed on the NASDAQ Global Select Market for three years, but it didn't meet the income requirements for the last two years, NASDAQ could delist that company. How Does Delisting a Stock Work? Stock exchanges have rules and standards that companies must meet to be listed. These are called listing standards. Some exchanges have "initial listing standards" that apply to new stocks, and "continued listing standards" stocks must meet to stay on the exchange. Continued listing standards might be higher or lower than the initial standards. Others might only require that the same standard be maintained throughout a stock's listing. Note There are more than 20 securities exchanges registered in the U.S. Each has its own listing standards. Delisting occurs when a stock and the issuing company do not meet the listing criteria for the exchange it is listed on. For instance, to be listed on the NASDAQ Global Select Market, a company must meet at least one of the four set standards for that market. Each of the four standards requires a minimum stock bid price of $4. For the first standard, a company also needs to have: Pre-tax earnings: $11 million or more combined over a three-year period, greater than $0 for each of the previous three years, and more than $2.2 million in each of the previous two years For standard two, it would need: Cash flows: At least $27.5 million combined for the last three years, and no negative flows over the last three yearsMarket cap: $550 million year-over-year with cash flowRevenue: More than $110 million For standard three: Market cap: More than $550 million over the last 12 monthsRevenue: More than $110 million for the last fiscal year For standard four: Market cap: $160 millionTotal assets: $80 millionStockholder's equity: $55 million All four standards require that a company meet the various liquidity requirements that apply to the company's position—whether it is an initial public offering (IPO), a spin-off, a seasoned company, or an affiliated company. If ABC company was listed on the Global Select Market under standard four, but its market cap dropped to under $160 million, it would be sent a notification from NASDAQ that that it was not compliant. However, the exchange would likely grant the company a grace period to become compliant again. If ABC company could not reach listing standards again, it would be delisted from the Global Select Market. Note Companies can also choose to be delisted. That might happen if, for example, an issuer were to decide to take itself off of the public traded markets altogether. When a stock is going to be delisted, the exchange must file Form 25 within a reasonable time. The exchange decides on a delisting date that is at least 10 days from the day Form 25 is filed with the Securities and Exchange Commission. The exchange also is required to post a public notice on its website at least 10 days before the delisting date. Types of Delistings There are two types of delistings: exchange-initiated, sometimes called "involuntary delisting," and issuer-initiated, sometimes called "voluntary delisting." Exchange-Initiated Delisting Exchange-initiated delisting occurs when the exchange a stock is listed on takes action to remove a non-compliant company from the list of tradeable stocks. The exchanges do this to protect investors from failing companies, as not all companies are as transparent or follow the rules as well as others do. An exchange will typically delist a stock after it has given the company a chance to meet listing standards again. Note When a company is involuntarily delisted, it is often a bad sign of financial or managerial trouble, and it often causes the stock price to fall. Issuer-Initiated Delisting A company can ask to delist its stock from the exchange on which it's traded. When a company voluntarily delists, it may not be for bad reasons. One reason could be that it wants to go private. In that case, its shares have been bought out, maybe by a private equity firm. It could be a sign of good things to come for the firm. A stock might be delisted as a result of a merger or a financial restructuring. In these cases, its stock might move to another exchange or trade under a new ticker symbol. What It Means for Individual Investors Delisted stocks are removed from the exchanges they used to trade on. They're then traded "over the counter" (OTC). OTC stocks are traded through what is called a "market maker." Pricing details are provided by either the Over-the-Counter Bulletin Board (OTCBB) or Over-the-Counter Link LLC. If the stock's price has dipped below the level required by listing standards, the company could use reverse splits to correct the pricing problem. This doesn't affect the value of your investment, but it gives you fewer shares in a company. The main contrast between an OTC stock and a stock on a major exchange is that your broker is less likely to deal with an OTC stock. That isn't to say that they won't, but some brokers don't offer OTC stocks. If you want to keep a stock that has been delisted, you'll need to work with a broker that offers OTC trading. Even if your brokerage doesn't deal in OTC stocks, you will likely have the chance to sell or convert your shares when the company is delisted. Your broker may also set a date that the stock can be sold or converted using its services. If the company is delisting because it is going private, you'll probably get a buyout offer from the issuer. If you don't accept the offer, your share will lose its value when the company is delisted. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Office of Investor Education and Advocacy. "Listing Standards." Accessed Dec. 6, 2021. U.S. Securities and Exchange Commission. "National Securities Exchanges." Accessed Dec. 6, 2021. NASDAQ. "Initial Listing Guide." Accessed Dec. 6, 2021. U.S.C. 17 CFR § 240.12d2-2. "Removal From Listing and Regulation," (a). Accessed Dec. 6, 2021. U.S.C. 17 CFR § 240.12d2-2. "Removal From Listing and Regulation," (b)(1). Accessed Dec. 6, 2021. Securities and Exchange Commission. "Over-the-Counter Market." Accessed Dec. 6, 2021.