STOCK DELISTING 101

#StockSmarts #StockDelisting #StockMarketBasics

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Why do companies delist from the stock market?

Over the past few years, I have delivered content on IPOs, listing by way of introduction, secondary offerings. These are all ways for companies to list and have their shares in the stock market. 

Delisting is the opposite, delisting actually means that the company would remove it shares from the stock market and it would move from a Publicly traded company into a Privately traded company

There's a variety of reasons on why companies get delisted in a stock exchange.  

Let me address one item though, when a company delists it does not mean it is bankrupt or the company is not earning anymore. Similiar to the ABS franchise issue, I got a lot of messages asking if ABS CBN would delist because they would lose their franchise. This post is to give you 3 reasons on why companies would delist and I hope it brings you enough information that you trade and invest based on data on not just noise. 

REASON ONE

One reason is they would delist just because they would want to make the company private once again for the reason of they just want to control everything internally without the scrutiny of the public. That's what Micahel Dell did in 2013 when he brought Dell Computers back into a private company.

REASON TWO

Another reason for delisting is when companies fail to meet the requirements of the stock exchanges that they are listed on. That's what happened to RWM in 2019, when it failed to meet the required public float of 10%.  That is what also is happening right now to Pepsi. Pepsi announced that they will be delisited from the Philippine Stock Exchange as their float is currently at 7.9% and won't be able to comply by the December 18, 2020 deadline set by the PSE to have their float raised to 10%.

For the first two reasons, normally a tender offer is given as a chance for investors to liquidate and sell their shares so they can get out of the position. This is a chance for the investors to swap their shares into cash before the company turns private once again. 

REASON THREE

WHAT HAPPENS TO INVESTORS WHEN A COMPANY DELISTS?

If the company is running good and well and is giving out dividends then you are still a part owner of a company that is running good and well. The only problem is you become a part owner of a private company thus getting out, access to info, data, research, would also be harder to come by. It would also be harder for you to sell your shares at the price that you want because there won't be an open market where you can sell your shares readily and easily. It also will require more paperwork and time to get out of your shares, assumung that you have a buyer for your shares unlike in the stock market where you could do everything in just a few seconds and with lesser taxes and fees.

The problem is if the company is in trouble financially and is not doing so well, you may have a hard time to get out if the company is private cause for sure it would be harder to convince someone to by the shares from you.

[elainereyes]

Thanks for this. Very clear. Galing po ng pagkakapaliwanag mo sir 😊

[aydinoverseas]

Thanks for making timely videos. Once a company becomes private there is a chance that transparency will be compromised.

[derey]

Galing mag explain! I am working on a research paper about Pepsi being delisted from PSE. Very helpful.

[RichardDow-djmrswotchnonstop]

JAGX delisted. If I cannot buy or sell it on Webull yet I still own it what good is it to me?

[Interest_things]

Ganda ng explanation mo sir Germo, ang linaw. Pero mas maganda lakers cap mo hehehe. Arbor na. 😂

[rasharasha]

Idol MG.. am on my trading and stock market too but youre giving me so much tips and technical analysis.
Thanks allot.

[crispindeleon]

Yo man, appreciate your content. My brother is also a huge fan of yours. Keep it up!

[jorren]

What should you do after you have accepted the tender offer of a delisted company but was announced that the tendered shares will be duly executed through the Deed of Absolute Sale of Shares? (PIP for example)

[silan]

Hi Sir Marvin, I hope ur well. Any ideas about AR****Will investors lose if it's delisted***What about news about a takeover****It'sbeing more than 8 months already since it was suspended***Thanks Sir

[nanyunie]

How long have you been in the stock market marvin?

[PatrickMiguel]

salamat sir marvs. learning something new everyday!:)

[jericohayo]

Ganda ng condo Sir Marvin. Ang taas mo na, dinig parin yung ingay ng kalsada..Hehehe

[celchuaco]

Hi idol! You explained delisting very well. ❤️ I am just curious what is a public float and why the requirement is 10% ... 🤔

[cliffordjr.tabares]

Sir Marvin, pa'no po ang computation ng stop loss? And what if may multiple stocks kang hawak, how should we compute? Thank you po sir, and God bless you more sir.

[benedictvelasco]

May stock certificate po kami ng pnoc ec class b shares, medyo malaki laki po sya kaso delisted, pano po ba namin ma cacashout yun? Need help, willing to share some sa makakatulong

[tickledpink]

Question po: What happens to the trillions of funds invested through a broker ? How does it work? Where does it go and who's managing it? Please enlighten me Sir. Appreciated if you could prepare a vlog on this. Thank you po in advance.

[ricenincassie]

Wow so much info thanks a lot sir marvin. God bless and more power...

[joshuabagay]

Thank you sir Marvin! I'm learning a lot from your videos. 😁

[lilachoney]

let me know.i worry if it goes to zero can u end up owing more money than what u started with? if i bought stock for $5 and the stock delists and goes to zero. Do i just lose that $5 when it goes to zero? or will i end up paying more?

[bismuthlogan]

Hi Marvin are we referring to preffered stock or common stock do they have the same approach?