Why do stocks get delisted from Nasdaq or the NYSE?

Delisting comes in two kinds. Voluntary is undramatic: the company is acquired, goes private, or moves exchanges, and shareholders normally receive cash or shares in the acquirer. Involuntary is the one people mean, and it follows a short list of documented failures.

The standard triggers

Minimum bid price. The famous one. Exchanges require a stock to trade above $1.00, and drifting below it for roughly 30 consecutive business days brings a deficiency notice with a compliance deadline attached, typically about 180 days.

Market value or public float falling below the exchange threshold. Shareholders equity below the required minimum. Late filings, which is why a notification of late filing is worth noticing. Too few round-lot holders. And fraud, bankruptcy or auditor resignation, any of which can move things quickly.

Why the price rule matters more than the rest

For small caps the price rule is where the money moves, because the standard fix changes the share structure. When the compliance clock runs down, the usual remedy is a reverse stock split, which multiplies the price back over $1 without changing the business at all.

If the company drifted under a dollar because it was issuing shares to fund losses, and nothing about that changes, the split resets the price and the issuing resumes. That is the loop behind companies that reverse-split more than once. Exchanges have tightened rules on repeat splits for exactly this reason.

You can watch the clock

The deficiency notice is disclosed, usually in an 8-K under Item 3.01 (a 6-K for foreign issuers). It states the deadline. From there, the sequence to a reverse split is predictable: notice, shareholder vote, effective date.

Related reading: what happens to your shares if it does get delisted and how to tell if a company is diluting.