Ascension: How does it work and why is it important

Spark Global Limited Reports:

You may be reading this and wondering, I’ve heard of initial public offerings or initial public offerings, but what is “upswing”?

Chances are, if you’ve been day trading for any length of time, you’ve bought and sold over-the-counter stocks that are often too small to meet the stringent requirements required to be listed on a formal exchange like Nasdaq or the New York Stock Exchange (NYSE).

When a company’s shares are listed on the over-the-counter or pink sheet markets, the shares are traded directly by brokers over telephone or computer networks.

While there are several reasons why a company can list over-the-counter, this does not provide a lot of liquidity or exposure. However, trading on a formal exchange is not.

This brings us to today’s main topic: ascension.

The post focuses on listing, which is a way to move over-the-counter stocks to an organized exchange like Nasdaq or the New York Stock Exchange.

Let’s jump!

What does ascension mean?
In financial markets, an uptick is the practice of moving a company’s shares from an alternative trading platform such as the OVER-THE-COUNTER market (ASX or TSX) to a major stock exchange such as Nasdaq.

If a company is listed on an over-the-counter market, its shares will be traded directly among competing brokers, rather than through a centralized exchange.

These broker-dealers buy and sell stocks on behalf of clients, often Posting quotes for specific stocks.

The example of a rising stock
Some examples of stocks that were recently traded over the counter or on smaller exchanges and later moved to larger exchanges include:

Aurora Cannabis(NYSE :ACB)
Dyadic International(NASDAQ :DYAI)
Aphria (NYSE: APHA)
Kronos Group (NASDAQ: CRON)
Lithium America (NYSE :LAC)
Hangers (NYSE: HNGR)
Understand uplisting requirements
Going public is an interesting process that can help open up countless growth opportunities for small companies.

That said, there are sometimes misconceptions about the whole listing process and the requirements that over-the-counter shares must meet before they can be transferred to a large exchange.

Higher listing requirements are a set of conditions that over-the-counter stocks must meet before they can be upgraded to major stock exchanges such as the New York Stock Exchange or Nasdaq.

These criteria usually measure the market share and size of the listed stock, as well as the underlying financial strength of the issuing company. Exchanges use the requirements as a way to maintain their visibility and reputation.

With that in mind, here are some important points stock traders and investors should know about the rally.

First, promotion is not an automatic process, and requirements vary with the exchange. Even if a company meets all the requirements for going public — share price, corporate governance requirements and financial requirements — it still awaits final approval from Nasdaq or American Express.

Sometimes this happens almost without delay. But other times, the process can take weeks. So patience is worth it, as the timing is uncertain and entirely dependent on Nasdaq’s approval.

Second, the stock is listed on Nasdaq at $4 a share. The price is determined by the bid price of the stock, not the closing price.

Nonetheless, if a company meets different requirements, it may qualify for an alternative listing at a closing price of $2.00 or $3.00.

Third, companies that are not profitable and have incomplete operating histories can still be listed on NASDAQ. But it must meet other criteria, and it must bid above $4 for 90 consecutive trading days. However, this does not apply to profitable companies.

Finally, many companies prefer reverse splits to meet the minimum stock price required to list on Nasdaq. The exchange fully accepts this and will evaluate the outcome of the split accordingly.

An example of a reverse split is if a company’s stock price is $1 and there are 500,000 shares outstanding that do a 1 for 2 reverse split, this will increase the value of the shares to $2 and reduce the number of shares outstanding to 250,000.

If you own 500 shares at $1 a share, you will own 250 shares at $2 after the split takes effect.

It’s a very positive sign for a company to go public and boost its share price through a reverse split, which is very different from a company that avoids delisting through a reverse split.

But to many, especially those who have suffered a reverse split only in the context of a stock trying to avoid delisting, a reverse split is a sign that a company is underperforming.

The benefits of moving from otc to a major exchange
The reasons for the decision to list on a major stock exchange vary, but doing so is good for the company.

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