The Nasdaq is a big place where lots of companies have their stocks. Stocks are like small pieces of the company that people can buy and sell. Sometimes, a company's stock can get really low and be worth only 1 cent. This is called a penny stock. The Nasdaq wants to make sure that the companies on their place have good stocks, so they made new rules. If a stock stays below 1 cent for too long, the company can get kicked out of the Nasdaq. This will help make sure that the stocks are good and the companies are doing okay. Read from source...

Nasdaq is introducing stricter delisting rules for penny stocks. The proposed changes are aimed at companies that often engage in a pattern of repeated stock splits, usually those in financial distress or experiencing prolonged operational downturns. Nasdaq believes such behavior is often indicative of deep financial or operational distress within such companies, rendering them inappropriate for trading on Nasdaq for investor protection reasons. However, the article failed to provide data to support or refute these claims, leading to concerns about the validity of the article's conclusions.

Bearish

Reasoning: The introduction of stricter delisting rules for penny stocks by Nasdaq could potentially lead to the removal of non-compliant companies from trading on its exchanges. This move may affect smaller and financially distressed companies, leading to a negative sentiment in the market.

Nasdaq is proposing stricter rules for penny stocks to expedite the delisting process for non-compliant companies. Currently, Nasdaq mandates that companies listed on its exchanges maintain a closing price above $1. Companies that do not meet this requirement for 30 consecutive trading days are deemed non-compliant and are given 180 days to regain compliance. If the company's stock price does not rise above $1 after 180 trading days, it can request a second 180-day compliance window.

The proposed changes include suspending companies from trading on Nasdaq exchanges if their share price has been below $1 on the completion of 360 trading days, effectively eliminating the option to appeal. It also plans to immediately send a delisting determination to any company whose share price has fallen below $1 if it has effected a reverse stock split within the prior one-year period.

The proposed amendments are targeted at companies that often engage in a pattern of repeated stock splits, usually those in financial distress or experiencing prolonged operational downturns. Nasdaq believes that such behavior is often indicative of deep financial or operational distress within such companies, rendering them inappropriate for trading on Nasdaq for investor protection reasons.

The two proposed changes to Nasdaq's listing standards are subject to approval by the U.S. Securities and Exchange Commission. Nasdaq declined to comment further when approached by Reuters.