Stuckholder
Categories: Ethics/Morals, Investing
What a day. This morning, we bought 100 more shares of Suspiciolicious, Inc. stock after they issued a press release celebrating higher-than-expected earnings. That brought our grand total up to 500 shares, and we were hoping to ride the earnings wave for a few more days before selling some shares for a nice profit early next week. Maybe we’d use it to buy ourselves something nice, like a beret.
But then our dreams were shattered when the SEC announced it was suspending all Suspiciolicious trades for the next ten days. As it turns out, those earnings reports may or may not have been completely falsified. Not only that, but there’s some controversy about whether or not the delicious snacks made by the company actually meet FDA regulations, which is a little worrisome.
This ten-day freeze thing has turned us from a stockholder into a “stuckholder”...someone who owns stock but can’t sell it, thanks to the SEC halting all trade activity. And even worse, once the freeze is lifted, there's a really good chance that the value of Suspiciolicious’s stock is going to go down, not up. Which means we’re not only a stuckholder...we’re a stuckholder with 500 shares that might soon be just about worthless.
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Finance: What Does It Mean to Delist?4 Views
finance a la shmoop what does it mean to delist? well when you list your company
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]
the list of publicly traded stocks on some exchange somewhere you know like
this list think listing good...de- listing probably very bad delisting
happens in one of two ways either an already existing public company gets
bought by an even larger company and it no longer trades is a separate
standalone security so its ticker symbol has taken off the exchange and la-dee-da [Company name removed from stock board]
it's done that's good but delisting also happens when a company's stock price is
so low that it can't trade as a standalone company anymore meaning that
it comes to trade at a minimum threshold of an exchange like below $1 a share
yeah breaking the buck there is a little different with equities but it's a bad
thing why is this a problem well if buyers
want to buy a stock there's a given amount of administration and overhead
and legal things that have to be done that cost money so if that minimum fixed
cost is something like four or five cents a share
then at $1 it costs four or five percent of the investment each time those shares
are traded right like that's at a buck a share each and it gets worse as the [Arrow points to share price]
stock falls further below a dollar so to fight delisting companies often do
reverse splits that is if they had two hundred million shares outstanding and
we're gonna get delisted trading at $1 a share while they might do a one for ten
reverse split such that after this reverse split the company has only 20
million shares outstanding but they're trading now at about ten bucks a share
it's not a great way to go investors usually hate things like that [People arguing over shares]
and would likely sell down the stock on the announcement but keeping the stock
well above a buck a share keeps the delisting demons at bay [Man stood in the street and demons float around him]
at least for a while