What is “Delisting”?
Borders booksellers may be delisted this year, according to an article on CNNMoney.com. What does “delisting” mean, exactly? Investopedia.com defines “delisting” as:
The removal of a listed security from the exchange on which it trades. Stock is removed from an exchange because the company for which the stock is issued, whether voluntarily or involuntarily, is not in compliance with the listing requirements of the exchange.
(As we mentioned recently, a “security” is any unit of expected value. In this case you can think of it as “stock”.)
The CNNMoney article specifically says that Borders may be delisted because its stock price is slipping below $1 per share. Stock exchanges protect their reputations by requiring their listed companies meet certain financial benchmarks. Often these requirements have to do with earnings, cash flows, or asset holdings. Borders is traded on NASDAQ, and you can find the NASDAQ’s latest requirement document here.
If a company falls below the required benchmark(s) for their particular exchange, their stock can be removed from that exchange or “delisted”.
