Delisted e-commerce companies - statistics & facts
Delisting takes place when a company’s stock is removed from a stock exchange. This occurrence, voluntary or required, is generally seen as a negative sign for the company. Firms delist their stock for a number of reasons, including: failing to meet the exchange’s financial requirements, bankruptcy, or the company opting to go private. However, the consequences of delisting stock are still significant, and a business in danger of delisting their stock will typically attempt to avoid this.
In 2022, the SEC added over 80 enterprises to its list of companies facing potential removal from American exchanges. Included in the list were Chinese e-commerce leaders JD.com and Alibaba Group. This was a result of the firms refusing to allow American officials to review their companies’ auditing — a requirement for listing on American exchanges. This guideline was implemented in 2020, a requirement of the Holding Foreign Companies Accountable Act (HFCAA). Initially, while this news negatively impacted Alibaba Group stock (BABA), causing it to drop temporarily from $100.52 to $89.37 U.S. dollars, the company quickly made a statement on striving to maintain its listing status on the NYSE. Ultimately, a preliminary agreement between the U.S. and China that allows for U.S. auditors to investigate Chinese companies has allowed both JD.com and Alibaba to avoid delisting due to the HFCAA.
E-commerce companies in danger of delisting
Companies must meet guidelines called listing standards in order for their stock to be publicly traded. The New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations Stock Market (NASDAQ), and the Shanghai Stock Exchange make up the largest exchange operators worldwide when looking at listed companies' market capitalization. With both the NYSE and NASDAQ located in the United States, when it comes to delisting, the U.S. Securities and Exchange Commission, or SEC, plays an important role in filing exchange delistings.In 2022, the SEC added over 80 enterprises to its list of companies facing potential removal from American exchanges. Included in the list were Chinese e-commerce leaders JD.com and Alibaba Group. This was a result of the firms refusing to allow American officials to review their companies’ auditing — a requirement for listing on American exchanges. This guideline was implemented in 2020, a requirement of the Holding Foreign Companies Accountable Act (HFCAA). Initially, while this news negatively impacted Alibaba Group stock (BABA), causing it to drop temporarily from $100.52 to $89.37 U.S. dollars, the company quickly made a statement on striving to maintain its listing status on the NYSE. Ultimately, a preliminary agreement between the U.S. and China that allows for U.S. auditors to investigate Chinese companies has allowed both JD.com and Alibaba to avoid delisting due to the HFCAA.
