What Does the Q Stand for at the End of a Stock Symbol?

A company goes bankrupt because it cannot meet its requirements to creditors; in other words, it cannot pay its bills. When the company is no longer able to produce goods and services, it goes bankrupt under Chapter 7 of the U.S. Bankruptcy Code. In such cases, all assets are sold and the company goes out of business. Chapter 11 is the other available option for corporate bankruptcy, and it allows firms to reorganize. Stocks with "Q" after their listings are stocks of companies in Chapter 11 bankruptcy.

Stocks in bankrupt companies continue to trade during bankruptcy proceedings, as the court can take months or even years to approve Chapter 11 reorganization plans. These stocks are usually traded as over-the-counter "pink sheets," and they are not subject to the same regulations as stocks traded on organized exchanges. The market in stocks of bankrupt companies is often artificial. Unscrupulous brokers create demand by spinning rumors that the stocks will maintain value or be replaced by stock in the reorganized firm. Traders buy these stocks on the basis of a rise in price that does not reflect any rise in value.

It is possible for a short-term trader to make a small, fast profit if a bankrupt stock rises in price and he is able to sell it before the price falls again or before the stock is no longer traded. Bankrupt stocks no longer trade once the court approves the reorganization plan. The reorganized company may, in rare cases, grant some of its new stock to former shareholders of its predecessor. That stock may be worth more than the price at which its stock trades while in "Q" status. However, according to a May 2011 article in "Bloomberg BusinessWeek," only four of 41 companies that went bankrupt delivered any value of any kind to shareholders once they reorganized.

Once stock in a reorganized, post-bankruptcy stock becomes available, any investor can buy it. Some investors avoid reorganized companies because of the past performance of their predecessors, but these stocks can rise in value if the reorganized entity succeeds in rebuilding its prior business. They can also gain value if the reorganized companies are taken over by other firms. However, not all reorganized companies do succeed, and before buying stock in any company thorough research is recommended.