THQ is facing the possibility of being de-listed from the NASDAQ stock market after the plunge and stagnation of its share price below the minimum bid price of $US1.
In order to be listed on the NASDAQ, companies must meet certain requirements, among which are a minimum bid price and a minimum market value of publicly held shares. If a company can no longer meet these requirements, they must notify the NASDAQ by filing “Form 8-K” to the SEC. This form was filed today by THQ.
The NASDAQ, which originally stood for the “National Association of Securities Dealers Automated Quotations” is the second largest stock exchange in the world. Like other major stock exchanges it enforces strict standards on the companies that trade on its market, and if a business does not look financially healthy then it may serve as too big a risk to remain listed.
So what does this mean for THQ?
A de-listing does not necessarily mean a company is going to go bankrupt. What is does mean is the company will no longer be able to trade on the NASDAQ — one of the largest stock markets in the world.
A company can continue to trade shares even after a NASDAQ de-listing – it just cannot do it on the NASDAQ share market. In the US, companies can continue trading shares using Over The Counter Bulletin Boards, also known as “Pink Sheets”. Companies quoted on the pink sheets system do not need to meet the minimum requirements or file with SEC, but this is a risky system because it is not as well regulated, they do not require companies to register with SEC, and the value of stocks are speculative.
What this spells is the beginning of a very difficult time for THQ. We will keep you posted with updates.