Penny Stock

A stock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure. They will often trade over the counter through the OTCBB and pink sheets.

The term itself is a misnomer because there is no generally accepted definition of a penny stock. Some consider it to be any stock that trades for pennies or those that trade for under $5, while others consider any stock trading off of the major market exchanges as a penny stock. However, confusion can occur as there are some very large companies, based on market capitalization, that trade below $5 per share, while there are many very small companies that trade for $5 or more.

The typical penny stock is a very small company with highly illiquid and speculative shares. The company will also generally be subject to limited listing requirements along with fewer filing and regulatory standards.

Investment dictionary. . 2012.

Look at other dictionaries:

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  • penny stock — penny ,stock noun count AMERICAN a STOCK in a corporation that costs less than one dollar and usually has a very high risk …   Usage of the words and phrases in modern English

  • penny stock — n. a highly speculative stock traded over the counter, typically at prices under one dollar per share …   English World dictionary

  • Penny stock — In the U.S., a penny stock is a common stock that trades for less than $5 a share and are traded over the counter (OTC) through quotation services such as the OTCBB or the Pink Sheets. Although a penny stock is said to be thinly traded, share… …   Wikipedia

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  • penny stock — Used in the context of general equities. stock that typically sells for less than $1 a share>, although it may rise to as much as $10/share after the initial public offering, usually because of heavy promotion. All are traded OTC, many of them …   Financial and business terms

  • Penny-Stock — Als Penny Stock bezeichnet man Aktien, deren Wert unter einer Einheit in lokaler Währung liegt. Im Euro Raum sind dies also Aktien, die einen Wert unter 1 EUR besitzen. In USA ist der Sprachgebrauch allerdings anders, denn dort gelten Aktien, die …   Deutsch Wikipedia

  • penny stock —  Stocks that sell for less than $1 per share. Penny stocks are traded over the counter at regional stock exchanges. The penny stock market has frequently been the subject of investigations for price manipulation …   American business jargon

  • penny stock — Stock Exchange. common stock, usually highly speculative, selling for less than a dollar a share. [1930 35, Amer.] * * * …   Universalium

  • penny stock — noun a stock selling for less that $1/share • Hypernyms: ↑over the counter stock, ↑OTC stock, ↑unlisted stock …   Useful english dictionary

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