Nasdaq Delistings Way Up in 2008

The major stock exchanges (such as the Nasdaq and NYSE) are encountering weakness from all sides in 2008. Not only has the IPO market slowed considerably (many companies are sagely waiting until the market conditions are more favorable), but the number of delistings (especially on the Nasdaq) have grown considerably compared to 2006 and 2007.

A recent article in the Business section of the Guardian pointed out that the number of Nasdaq delistings has risen dramatically compared to last year. The article points out that as of August 7th, there have been a total of 54 Nasdaq delistings, compared to 48 IN ALL of 2007 and 52 in 2006. A quick calculation will show that there could be as many as 90+ Nasdaq delistings in 2008, an incredible increase over last year and the year before.

Things aren't quite as bad for the NYSE - as of August 7th, there have been 11 delistings, compared to 21 in 2007 and 14 in 2006.

There are a number of reasons why delistings have increased dramatically over last year, but they all circle back to basically the same reason - the general weakness in the credit markets. Struggling companies are finding it much harder to raise much-needed capital in order to continue their operations. Companies in a weak and perilous financial situation are being shunned aggressively by investors that are actively looking to cut back on "weak" companies occupying spots in their portfolios. Companies that are running low on cash are finding it nearly impossible to raise additional funds, so many are forced to eventually go out of business.

This has resulted in the major stock exchanges taking a hit from multiple angles - not only are they suffering from less new issues coming to markets, but there are less currently listed companies that will be paying membership fees. These numbers will certainly improve when the markets in general start to tighten up - when that will be is anyone's guess.

Filed under: The Economic Meltdown | General Market News | General Knowledge