Affymax, Inc (NASDAQ:AFFY) delisted from NASDAQ?
Affymax, Inc (NASDAQ:AFFY) has said that NASDAQ has served it a determination letter. When something like this occurs, there is a possibility that the company might be delisted from the exchange. This is significant particularly because NASDAQ has told AFFY that it is essentially operating in a limbo. The company had recalled its one and only drug, Omontys. In effect, this means that the company has no operating business that it can talk about, any longer. The company has no plans of appealing for a reversal on this decision.
How does listing work?
The NYSE and NASDAQ are sort of like premium clubs. They offer companies the exclusivity of being listed and recognized as premium companies that have a certain standing in the market. And so, to be listed on them, the respective companies have to meet certain set standards. This is because the reputation of the exchange depends on it and so does its credibility. It is no surprise then, that these major exchanges want only the very best. The listed companies have to ensure that they have a top-of-the-line management team and that their track record is on the level, at all times.
Does delisting mean ostracizing the company?
Though delisting has a negative connotation to it, it is not a sure-shot indication that the company is heading towards bankruptcy. There are numerous successful, private companies that conduct profitable businesses without being listed. Nevertheless, delisting can mean that raising money becomes a tougher proposition. In many cases, this is the starting point towards the descent to bankruptcy. If you are a shareholder, do a rethink about your investment in the delisted company.
The fact that the company was delisted means that it was unable to meet basic business requirements for stock market operations. Being shown the door from a premium club is definitely a disgrace just as being on it is a matter of prestige. Reconsider your investment and make a concerted decision. Cut your losses when you are still one-upped.