Definition of Penny Stock
What is a penny stock? What is the definition of the term penny stock?
The definition of a penny stock is a bit more complicated than you might think.
The literal definition of the term would be - a stock that trades for less than $1. Meaning, the stock is trading for just pennies.
For instance, a stock that is trading for 50 cents per share? That would be a penny stock.
Many times a stock that is trading for more than $1 is also called a "penny stock" - what gives?
The term "penny stock" can also apply to highly illiquid companies that trade on the pink sheets or through the OTCBB.
A $2 stock that trades on the pink sheets may be referred to as a "penny stock", even though it is trading for $2.
The term "penny stock", in a broader sense, can refer to any highly risky, highly speculative stock that doesn't trade on a major index such as the DJIA or NASDAQ.
A $5 stock could conceivably be thought of as a "penny stock" if it was illiquid, highly risky and traded on the pink sheets.
Again - the literal definition? A stock that is trading for less than $1.
The more commonly used definition? Any risky, illiquid stock that is trading on the pink sheets or the OTCBB.
Davemanuel.com Articles That Mention Penny Stock:
Trader Blows Out His Account, Begs For Money To Cover Losses
SEC Nabs Four For Manipulation of Medical Marijuana Stocks
General Motors Briefly Trades at $1
101 of All S&P 500 Stocks Now Trading for Less than $10 Per Share
Timothy Sykes DVD Review