What Happens When a Stock Gets Delisted?

What happens to a stock when it gets delisted? Do you lose your money and can you sell delisted stocks?

These are hugely important questions right now. A bill just passed the Senate that would force delisting of Chinese stocks like Alibaba and Baidu. It’s not just stocks of Chinese companies though and the recession could mean that hundreds of other stocks are delisted soon.

I’m going to show you what happens when a stock is delisted from the Nasdaq or New York Stock Exchange. I’ll show you why the exchanges delist stocks and what happens to your money. Then I’ll reveal how trading delisted stocks may actually make you money!

When a company wants to sell stocks, it lists on one of the market exchanges. By meeting certain requirements like number of shares available and price, the stock is listed on the exchange to buy or sell.

If the company fails to maintain some of these requirements, the exchange will send it a notification letter for delisting…basically kicking the shares off the market. Reasons why a stock is delisted range from failure to file annual reports, a stock price that falls under $1 for a long period or just low investor interest in the shares.

If the company doesn’t fix the problems, it’s shares get delisted and you won’t be able to buy or sell them on that exchange…but don’t freak out! The shares will immediately start trading on the over-the-counter, or OTC market. In fact, nothing happens to the shares or the company.

There are even some benefits to a company delisting its shares. The company can save millions in reporting and other fees and it allows management to focus on long-term growth. Of course, there are also cons to having your stock delisted.

For investors, delisting a stock will make its price go on a roller-coaster…mostly lower. There is a way to trade delisted stocks though that could mean big profits. Share prices usually crash right before delisting but then often jump higher when the stock starts trading again. All you have to do is time it right to make some of the highest returns you’ll ever get!

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
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[Sarah-ntve]

Recently bought some recommended stocks and now they are just penny stocks. There seems to be more negative portfolios in the last 3rd half of 2023 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?

[Nakameguro]

Another useful video would be what happens when the company files for bankruptcy, as this is a distinct possibility for many shares that go pink.

[JanineJ.Cromwell]

We are currently in the jaws of the worst bear markets I have seen, the average stock has been cut in half, and the only way to make money this year has been to either short or to trade long in very short time frames. I'm still at a crossroads deciding if to liquidate my dipping $117k stock portfolio, what’s the best way to take advantage of this bear market?

[seth]

Hey semper fi devil! Love the shadow box! 🙌🏻🙌🏻 cheers brother!!

[TheAndrewLopezFinancePodcast]

Interesting video, I was always curious about this

[Kermeous]

I've been investing for a few years, and this is super informative

[michaelchin]

Thank you, Joseph! I feel much better now. LOL.

[danglinghenry]

25, 000 x $2.02 of didi. I only bought because they are delisting and will no doubt end up OTC. Made 9x my money on Luckin coffee and love delisted stocks.

[jaya]

I still don't get it... so can I still sell my delisted stock on Robinhood? Or do I loose all my money in that delisted stock?

[KTA]

Thank you Corporal. I was worried. 1st Mar Div. USMC

[tazz]

Just sold my (CHL) shares yesterday. Hardly lost any money. It was delisted last year. All in all not bad.

[Hysteresis]

Can you do a video about what happens when a company you own stock in goes under? Specifically how to get ahold of the physical certificates? I assume the only way to extract any value is to hold the physical paper certificate long enough that it might become rare, and thus have some intrinsic value.

[zacharysmith]

Wicked video
Hit alot of points
Learned alot
Cheers 🍻

[BrunsEver]

Thank you. This was great. I do have a question though. What if my brokerage does not support OTC stocks? Would my shares disappear or be accessible some other way?

[BillyReedMusic]

Thank you for this inspirational information. I feel ready to cope with my stock, which just delisted a couple of hours ago.

[BensonGitau]

Why would anyone in their right mind invest in the OTC market? That's like the bottom feeders.

[OpticfIare]

SNDL holder with 20k stake currently worth 10k.... this really made me feel better thanks for the info!!!

[tomiboi]

Thanks for the video. Thoughts on Tusimple? The company declared voluntary delist today. Net cash is over $600MM and currently carries a $60MM market cap.

[jordankendall]

Thanks for sharing. I have been investing for years and did not know what would happen if a company is delisted since it has never happened to me. Recently I invested in CHL at its June low (I got lucky). I now know what might happen if it is delisted due being a part Chinese state-owned company. If fundamentals are still good, I will buy more if it falls below my cost basis. Although I am sure the Chinese will bid up the stock due to being told to do so.

[PhayvanhChanthalangsy]

PEI will be delisted and all my money in it. Lost over 50% too late to sell. Help me what should I do