Why are there companies on the NASDAQ and NYSE with annual incomes around $50,000?

Question

It's downright ridiculous. Why don't they get delisted? Naturally, they are having net losses quarter over quarter and year over year.

Thanks!

Answer 1

There are many reasons for a company to keep their public listing, it doesn't cost much. But delisting can be expensive and require a lot of money, why would someone put that money into it business that isn't profitable?

You have to look into the history of the company, it might be that such a company was once profitable and went public, then failed and kept their listing because nobody wanted to make the effort to delist them. An old example was Berkshire Hathaway which was once a listed textile manufacturer without profits until Warren Buffet invested in it and turned it around into a billion dollar investment firm.

Another possibility is that the company is a holding company and invest in companies that aren't paying dividends (hence no income) but do increase in value, once these companies are sold the listed company would be profitable overnight. This would make perfect businesssense.

Then some companies obtain a listing just to have one, they are subconsequently merged with a non-public "real" business which then easily obtains a listing. This is called a "reverse merger" and the original public entity has never the intention to develop a real business.

Delisting a business will harm a lot of small investors (unless they are bough out), if the company is delisted these shareholders can no longer sell their shares but the company would still be "public" and most publications still have to be done (SEC rules).