To The Moon

Some Chinese stocks plunged again recently, with $Bilibili Inc.(BILI)$ plunging 12%, $Kanzhun Limited(BZ)$ plunging 14%, $Zhihu(ZH)$ and $iQiyi Inc.(IQ)$ plunging 15%, and $Youdao(DAO)$ plunging 18%。

Such declines have been in the news for the last year and investors are not surprised. However, if they continue to fall, these stocks will be forced to be delisted.

As of May 26, nearly 80 companies' share prices have fallen below $1, with the proportion of Chinese stocks nearly 30%.

The so-called "big companies" such as $Zhihu(ZH)$ $DouYu(DOYU)$ , and $DiDi Global Inc.(DIDI)$ are also on the verge of delisting.

According to Nasdaq listing rules:

If the stock price is below $1 for 30 consecutive trading days, it will receive a delisting warning. There will be a 180-day grace period. If it has been at or above $1 for 10 consecutive trading days before the expiration date, the stock will be deemed to have regained compliance with the above NASDAQ listing rules.

What will company choose-avoid/accept delisting?

In practice, listed companies have a variety of means to avoid delisting, such as reverse stock splits, i.e., share pooling, to increase the share price through directly.

Of course, a stock price below $1 means that most companies have serious fundamental problems. If a company chooses to maintain its listing status, it will consume a lot of human and financial resources. But generally, companies that are overwhelmed will choose to delist voluntarily.

This time, the $1 delisting crisis of Chinese stocks contains both companies whose main business has deteriorated and large companies such as $Zhihu(ZH)$ and $DiDi Global Inc.(DIDI)$ -- many investors did not expect.

$Zhihu(ZH)$ has been listed for one year, and the drop from the high point is over 90%, which is epic.

The following chart is a list of Chinese companies with market capitalization above $100 million and share price around $1. You should be aware of the risks.