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How do stocks get listed on Nasdaq?

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Quick Answer

To get listed on the Nasdaq, stocks have minimum bid price requirements, quantitative requirements, capitalization alternatives and peer review requirements, reports Find Law. The Nasdaq is one of the three major U.S. markets in which securities are purchased and sold.

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Full Answer

The Nasdaq has a minimum initial bid price of $5, as of 2016, reports Find Law. After reaching this price, the stock must remain at a minimum price of $1. This requirement helps maintain credibility within the exchange and prevents undesirable market activities that come with low-priced securities. Stocks not meeting this pricing requirement are known as penny stocks and trade on separate exchanges, mention The Street.

The quantitative requirements relate to a net tangible asset requirement of $6 million, states Find Law. In addition, there are net income requirements that relate to the latest fiscal year or two of the past three fiscal years. The net income amount is $1 million. Minimum shareholder requirements and public float balances also influence eligibility on the Nasdaq.

The capitalization alternative is for companies that do not meet the quantitative requirements, explains Find Law. This requirement states that a company must have $75 million in market capitalization, or total assets of $75 million and total revenues or $75 million. Finally, stocks on the Nasdaq are subject to peer review requirements to maintain compliance with quality control standards set forth by accounting firms.

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