What happens if a stock is delisted? (2024)

What does it mean that a stock is delisted?

A stock is delisted when it’s removed from a stock exchange. This can be voluntary, when the company chooses to do so for strategic or financial reasons, or involuntary, when the exchange forces the company to delist.

A delisting of shares can be contrasted with an initial public offering (IPO), which is the process of a private company going public. This is when a company will put its stocks up for sale to the public and its shares are traded on a stock exchange.

Why does a company get delisted from the stock market?

There are two ways in which a company can be delisted from a stock exchange – voluntary and forced.

Voluntary delisting

Voluntary delistings occur when public companies choose to delist from an exchange, usually resulting in that company trading privately again. However, sometimes companies delist simply to move to another exchange.

Companies may want to delist for a number of other reasons:

  • Reduce costs. It’s expensive to trade publicly. The costs to ensure compliance with regulators and laws can be enormous, so smaller companies might find it’s not worth it to trade publicly
  • Make short-term profits. If a stock trades below its intrinsic value, the company may repurchase its own shares to profit over the short-term before delisting. This can also produce rewards for current shareholders, giving them considerable returns
  • Undergo a buyout. When a company is acquired, the new controlling shareholders may want to make the company private
  • Reduce decision-making time. Making decisions in a publicly traded company can take a lot of time, as the shareholders and the board of directors may both be able to vote. By removing the approval from shareholders for decision-making, companies can pivot faster

There are, however, disadvantages to voluntary delisting. If a company needs funding, they won’t be able to raise money through public markets. And, customers may see delisting as a sign of trouble in a company, even if it’s voluntary, potentially leading to a loss of market share.

Forced delisting

Stock exchanges force companies to delist if they don’t meet the regulatory requirements of the exchange they’re listed on. For example, the London Stock Exchange (LSE) requires all listed companies to hold a minimum market cap of £700,000. Additional requirements can include filing annual reports by a specific date or having a stock price above a certain value.

Discover more about stock splits and share buybacks and how these affect a company’s listing.

What happens to shares when a company gets delisted?

Shares don’t disappear after a stock delisting, but this does change how and where shareholders can sell or buy them. Additionally, the share price may or may not be affected by a stock delisting.

Let’s explore in more detail what happens to shares when a company is delisted.

How traders and investors are impacted when stocks are delisted

When a company delists, investors still own their shares. However, they’ll no longer be able to sell them on the exchange. Instead, they’ll have to do so over the ounter (OTC).

The value of shares doesn’t automatically rise or fall with a delisting, but when an involuntary listing takes place, it’s often a sign that a company is approaching bankruptcy. In this case, there’s a chance investors might lose their investment.

When a company delists voluntarily to trade privately, they sometimes offer shareholders additional benefits such as warrants, bonds, and preferred shares.

Traders can potentially profit from voluntary and involuntary delistings. If a company delists voluntarily, its share price can increase depending on the reasons for the privatisation. In this case, a trader can open a position to ‘buy’ (go long) if they think the share price will increase.

If the company is forced to delist, it often spells bankruptcy or causes investors to lose confidence. In this case, traders may open a position to ‘sell’ (go short) if they think the share price will fall.

What happens if a stock is delisted? (1)
What happens if a stock is delisted? (2)

Examples of delisted stocks

Burger King

What happens if a stock is delisted? (3)

Multinational fast-food chain Burger King delisted voluntarily from the New York Stock Exchange (NYSE) twice. The first time was in 2010, when it was privatised after a buyout by 3G Capital. It then relisted two years later but delisted again in 2014 when it merged with the coffee chain Tim Hortons. This merger led to the creation of a brand-new company called Restaurant Brands International. This company now publicly trades on the Toronto Stock Exchange (TSO) under the ticker QSR.

Dell Computers

What happens if a stock is delisted? (4)

Tech hardware manufacturer Dell Computers delisted from the Nasdaq and Hong Kong Stock Exchange (HKEX) in 2013 following a buyout by Silver Lake Partners for $24.4 billion. Dell relisted in 2018 on the NYSE at a share price of $46 under the ticker DELL.

US Airways

What happens if a stock is delisted? (5)

US Airways has undergone a forced delisting twice, both times after filing for bankruptcy. In 2002, the NYSE forced it to delist and two years later, the Nasdaq delisted it. In 2005, it merged with America West Holdings and in 2013, merged with American Airlines Group, which is now publicly listed under the ticker AAL.

China Mobile Ltd

What happens if a stock is delisted? (6)

An interesting delisting example occurred in 2021 due to pronouncements made during the Trump administration. The former president barred US citizens from investing in publicly traded companies with apparent ties to the Chinese military. This resulted in three Chinese telecommunications companies being delisted from the NYSE. These were China Mobile Ltd, China Telecom Corp Ltd and China Unicom Hong Kong Ltd.

Stock delisting summed up

  • A stock is delisted when a public company is removed from a stock exchange
  • Stock delistings happen either voluntarily or when stock exchanges force companies to delist
  • Shareholders still own the shares but can only sell them OTC when the stock is delisted
  • Stock delistings don’t inherently devalue shares, but forced delistings can be a sign of impending bankruptcy, leading to a drop in share value
  • Stocks are delisted all the time, such as Burger King in 2010 and 2014, Dell in 2013, US Airways in 2002 and 2005 and three Chinese telecommunications companies in 2021

Discover more about stock trading and improve your knowledge through our educational content:

  • How to buy and trade shares
  • Thematic investing and basket trading
  • IPO trading
What happens if a stock is delisted? (2024)


What happens if a stock is delisted? ›

If an investor owns a stock, but that stock gets delisted, they still own the stock, but its value is likely to decline significantly. Mandatory delisting is usually viewed as a sign of financial distress and can sometimes signal a forthcoming bankruptcy, which tends to decimate a stock's value.

What happens to my money if a stock is delisted? ›

Though delisting does not affect your ownership, shares may not hold any value post-delisting. Thus, if any of the stocks that you own get delisted, it is better to sell your shares. You can either exit the market or sell it to the company when it announces buyback.

Can you sell a delisted stock? ›

Failure to meet these requirements results in the shares being delisted. If you own delisted shares, you can still sell them on the Over-the-Counter Bulletin Board (OTCBB) or on the Pink Sheets, which have more relaxed regulations and few listing requirements.

Is a delisted stock worthless? ›

Once a stock is delisted, stockholders still own the stock. However, a delisted stock often experiences significant or total devaluation. Therefore, even though a stockholder may still technically own the stock, they will likely experience a significant reduction in ownership.

What happens to share price after delisting? ›

While delisting doesn't impact ownership, the shares may lose value post-delisting. If your stocks face delisting, consider selling them. Exit the market or sell during the company's buyback announcement. Making informed decisions based on a thorough analysis can contribute to achieving long-term investment goals.

How do you dispose of delisted stocks? ›

The security is under a long-term cease trading order. If the security cannot be sold in the market, it may be possible to dispose of the worthless security by gifting it to another person who can be related or unrelated to you. You will need to ensure that the person is not your spouse or minor child.

Is delisting good or bad? ›

A delisting does not directly affect shareholders' rights or claims on the delisted company. It will, however, often depress the share price and make holdings harder to sell, even as thousands of securities trade over-the-counter.

How to sell a stock that is worthless? ›

Sell Worthless Stock if Your Broker Holds the Shares

Many brokers have a plan to let their good customers sell them worthless stock for $1 or 1c for the lot. If you are a good customer, and stock is with the broker, ask. You should be able to negotiate some solution that will be satisfactory to both sides.

Can a delisted stock pay dividends? ›

Even if a stock's value doesn't take a nosedive after delisting, it can still be a sign of financial trouble at the company. If you own delisted dividend-paying stocks, for instance, dividend payments may shrink or dry up altogether if the company begins making cutbacks to preserve capital or reduce expenses.

What happens if a stock goes to zero? ›

Stock prices can fall all the way down to zero. That means the stock loses all of its value and a shareholder's earnings are typically worthless. In this case, the investor loses what they invested in the stock.

What to do with delisted? ›

If you still hold shares after they are delisted, you can sell them—just not on the exchange on which they traded before. Stock exchanges are very advantageous for buying and selling shares. When they delist and trade over the counter (OTC), selling shares and getting a reasonable price for them becomes much harder.

What is the Nasdaq $1 dollar rule? ›

Under certain circ*mstances, to ensure that the company can sustain long-term compliance, Nasdaq may require the closing bid price to equal or to exceed the $1.00 minimum bid price requirement for more than 10 consecutive business days before determining that a company complies.

What happens if a stock is delisted on Robinhood? ›

Delisting is when a stock is removed from an exchange. Here's what can happen if a security you own becomes delisted: The security's margin requirement can change. Because the security no longer trades on the same exchanges, a national best bid and offer (NBBO) no longer exists.

How long does a delisting take? ›

How Long Does a Stock Delisting Take? If a company fails to meet the minimum listing requirements, they can be delisted from the exchange it trades on. Companies have 10 days on the New York Stock Exchange (NYSE) to respond to a notification letter from the exchange.

How long does a stock have before delisting? ›

For example, on the New York Stock Exchange (NYSE), if a security's price closed below $1.00 for 30 consecutive trading days, that exchange would initiate the delisting process.

What to do if there are no buyers for a stock? ›

How to sell a stock if there is no buyer? You won't be able to sell your shares without buyers; you'll be stuck with them until there is some purchasing interest from other investors. A buyer may appear in seconds or take weeks for exceptionally lightly traded securities.

What happens to my money if Robinhood goes out of business? ›

Robinhood is a member of the Securities Investor Protection Corp. (SIPC). This means that any loss of an investor's securities (e.g., stocks and bonds) and cash held by Robinhood is protected up to $500,000 in the event the firm fails or goes out of business. This includes up to $250,000 protection for cash holdings.

What happens if there are no buyers for a stock? ›

How to sell a stock if there is no buyer? You won't be able to sell your shares without buyers; you'll be stuck with them until there is some purchasing interest from other investors. A buyer may appear in seconds or take weeks for exceptionally lightly traded securities.

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