ShmoopTube
Where Monty Python meets your 10th grade teacher.
Search Thousands of Shmoop Videos
Accounting Videos 351 videos
What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...
When a bond is secured, it means it's protected, i.e. there are assets that would be forfeited if repayment is not made. When it's unsecured... it'...
What is Counterparty Risk? Counterparty risk is the risk to either party within a transaction that the other will not or be unable to abide by the...
Finance: What Does It Mean to Delist? 4 Views
Share It!
Description:
What Does It Mean to Delist? To delist is when a company removes its name and ticker from an exchange. This means that the company is no longer available to be publicly traded on that exchange. It can be the result of a merger, a takeover by a private corporation, a bankruptcy, a name change, or if the company no longer meets the exchange’s listing requirements.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Accounting
- Terms and Concepts / Investing
- Terms and Concepts / Marketing
- Terms and Concepts / Metrics
- Terms and Concepts / Regulations
Transcript
- 00:00
finance a la shmoop what does it mean to delist? well when you list your company
- 00:08
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]
- 00:13
the list of publicly traded stocks on some exchange somewhere you know like
- 00:18
this list think listing good...de- listing probably very bad delisting
- 00:24
happens in one of two ways either an already existing public company gets
Full Transcript
- 00:29
bought by an even larger company and it no longer trades is a separate
- 00:33
standalone security so its ticker symbol has taken off the exchange and la-dee-da [Company name removed from stock board]
- 00:38
it's done that's good but delisting also happens when a company's stock price is
- 00:44
so low that it can't trade as a standalone company anymore meaning that
- 00:48
it comes to trade at a minimum threshold of an exchange like below $1 a share
- 00:53
yeah breaking the buck there is a little different with equities but it's a bad
- 00:57
thing why is this a problem well if buyers
- 01:00
want to buy a stock there's a given amount of administration and overhead
- 01:04
and legal things that have to be done that cost money so if that minimum fixed
- 01:09
cost is something like four or five cents a share
- 01:11
then at $1 it costs four or five percent of the investment each time those shares
- 01:17
are traded right like that's at a buck a share each and it gets worse as the [Arrow points to share price]
- 01:21
stock falls further below a dollar so to fight delisting companies often do
- 01:26
reverse splits that is if they had two hundred million shares outstanding and
- 01:31
we're gonna get delisted trading at $1 a share while they might do a one for ten
- 01:36
reverse split such that after this reverse split the company has only 20
- 01:41
million shares outstanding but they're trading now at about ten bucks a share
- 01:45
it's not a great way to go investors usually hate things like that [People arguing over shares]
- 01:48
and would likely sell down the stock on the announcement but keeping the stock
- 01:52
well above a buck a share keeps the delisting demons at bay [Man stood in the street and demons float around him]
- 01:56
at least for a while
Related Videos
GED Social Studies 1.1 Civics and Government
What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...