When the New York Stock Exchange -- or any exchange -- delists a stock, it stops trading on the exchange. This can happen by choice, such as a company taking its stock private. It happens involuntarily if the company doesn't meet the exchange filing requirements or the per-share value drops below the exchange minimum. The effect on your shares depends, in part, on why the delisting took place.
If your shares have been involuntarily delisted, that doesn't make them evaporate. They still exist, but they will be traded "over the counter." Over-the-counter stocks -- also known as penny stocks -- are generally low-value, high-risk investments. According to the CXO Advisory Group, stock analysts don't pay much attention to the merits of penny stocks. A 2008 study from the Fisher College of Business found, however, that dealing in involuntarily delisted stocks is usually a bad investment.
OTC stocks may not literally cost a penny, but they aren't worth much. The NYSE, for example, delists stocks that trade for less than a dollar a share. Penny stock values are listed on the National Quotation Bureau's "pink sheets." They show the sale and purchase price for OTC shares. When a stock delists and slides down into the OTC market, the sale price for shares is often 25 percent less than the purchase price. It may be as much as 100 percent less.
If you own, for example, 1,000 shares in a delisted company, you still own them after the company disappears from the exchange. You retain your voting rights at the shareholders meeting. If the company dissolves, you have the same claim on a percentage of its assets that you did before. You also have the right to sell your shares, but it's difficult to do. Selling takes extra paperwork, and many penny stocks trade sluggishly. Although some stocks turn around and re-list, your shares have probably become worthless.
Your investment may have some hope if a company delists by choice. If a company goes private, the owners have to buy up shares to delist. When the delisting actually goes through, that could mean a nice profit for you. Corporations also delist their stock because they've undergone a merger or acquisition. The delisting is just a prelude to listing the stock under the new corporate name. Some corporations just choose to switch to another exchange. In these cases, delisting doesn't hurt your shares.