Nasdaq and the Small Public Company Coalition studied roughly the same two decades of market data and came away with opposite instincts about what happens to a listed company after its market value slips below $5 million. The question sits close to the daily work of Gregg Jaclin, Managing Director at Exchange Listing LLC, who helps founders decide whether a company is large enough to go public at all and has said that recent years produced too many listings that were too small to trade well.
Both sets of numbers are now in front of the Securities and Exchange Commission, which agreed on September 11 to review Nasdaq’s proposed $5 million continued listing standard and has kept the rule stayed while it does. Read side by side, the two analyses mostly answer different questions.
What Nasdaq’s Data Shows About Companies Below $5 Million
Nasdaq’s case starts with a trend. The number of issuers below the proposed market value of listed securities (MVLS) threshold rose from 2 in 2021 to 140 in 2023, then eased to 122 in 2024 and 91 in 2025, according to the SEC’s approval order.
The exchange then tested the rule against history. Applied at $5 million for 30 consecutive business days, it would have caught 983 companies. Six months later, 65% of those companies were still valued below $5 million, with a median valuation under $3.7 million. Nasdaq’s position is that a sustained decline of that kind is “generally not temporary,” and that very small market values make a stock easier to manipulate because “less capital may be required to undertake manipulative trading activity.”
Nasdaq’s analysis also contains a figure that cuts the other way. Of the 983 companies, 497 were classified as “false positives,” meaning companies the rule would have delisted that were never later delisted for any other reason. That is 51% of the sample. For the companies that were eventually delisted, the median gap between first failing the test and actually leaving was 259 days.
What the Lewis Report Shows About Recovery
The Small Public Company Coalition (SPCC) commissioned Craig M. Lewis, a former chief economist of the SEC, to run his own historical analysis using data from 2006 through 2025. His figures appear in the coalition’s February comment letter and again in its petition for Commission review.
Lewis counted 816 companies that would have been delisted under the proposal. Of those, 640, or 78%, later recovered above $5 million. Three hundred sixty-five remained listed as of December 2025, with a combined market capitalization of about $22.3 billion. The coalition’s examples include LightPath Technologies, valued at $137 million in 2025, and Patrick Industries, valued at $2.3 billion.
Why the Two Analyses Point in Different Directions
The difference is mostly a matter of when each analysis looks.
Nasdaq measured companies at 180 days, roughly the length of the cure window that a $1.00 bid price deficiency receives. By that measure, most companies that fell below $5 million were still below it. Lewis measured whether companies ever recovered, over whatever period it took. By that measure, most did.
Both findings can hold at once. A company can stay under $5 million for six months and still be worth $50 million three years later. The policy question the Commission has to weigh is how much time a company should get before the exchange concludes that a decline is permanent. Nasdaq’s rule answers that question with 30 business days and a Hearings Panel exception of up to 180 days that, under Amendment No. 1, is tied to meeting initial listing requirements. The petitioners argue that a longer path is warranted. Cemtrex, Inc., which filed the other petition, put its objection in one line: “market capitalization is not an operating metric.”
Volatility and Upside in the Micro-Cap Market
Gregg Jaclin’s company Exchange Listing LLC focuses almost entirely with companies small enough to sit near a line like this one.
“The truth of the matter is there’s better upside in the microcap world,” Jaclin said. “If you buy a $5 stock that goes to $30, that’s a lot more compelling than a $500 stock going to $1,500. There’s a lot of upside there.”
A market where prices can multiply by six is also a market where they can fall by half. The historical record in both analyses shows companies doing each.
Asked earlier this year whether the tightening of listing rules was making the market healthier, Jaclin said:
“There’s just not going to be as many small-cap and microcap IPOs as there were for the last few years. I don’t necessarily think that’s a bad thing. I think there were a lot of companies that were too small, doing too-small deals, and the stocks weren’t trading well because they were having to raise more money afterward.”
The two data sets fit inside that view. Nasdaq’s numbers describe companies that stayed small after they fell, and the concern it raises about manipulation in thinly valued stocks is a real one. Lewis’s numbers describe companies that fell and came back, some of them to valuations in the hundreds of millions. A listing standard has to account for both groups.
What the Recovery Data Means for Founders Planning a Listing
For a founder still preparing to go public, the record carries a practical point. Since January, Nasdaq has required at least $15 million in unrestricted publicly held shares for a Capital Market listing under its net income standard, according to the SEC order approving the change. The distance between a company’s value on listing day and a $5 million floor is the cushion a growth plan has to protect, and both data sets show how far micro-cap values can travel in either direction within a year or two.
The Commission received written statements from supporters and opponents through October 6. Jaclin, in written remarks on the process, said the review “will be conducted on the existing record” and cautioned against treating the grant of review as the SEC agreeing with the petitioners, which he called “not an accurate summary at this stage.” Whatever it concludes about the $5 million rule, the two analyses now on file give founders a clearer picture than they had a year ago of how often small public companies fall, how often they recover and how long the recovery takes.
