Penny Stocks - The Price And Market Capitalization

When we are talking about the penny stocks we can describe them as stocks that have very low value, highly speculative stocks, unlisted on the stock exchange, and with small market capitalization. If a stock has any of these it can be called penny stock.

Penny stocks does have very low value. But, it is very difficult to say how low the value should be for some stock in order to be described as penny stock. There are a lot of opinions about the price of the stocks.

Penny Stocks Have Low Value

So, in general, if the price is really low then we are talking about penny stocks. Some says that the stocks with a price below $5 per stock are penny stocks. Other people are saying that all stocks with value below $3 are considered as penny stocks. And also there are some other people which claim that a stock is penny stock if its value is below $1.

Penny Stocks Are Not Listed On The Stock Exchanges

Penny stocks are also not listed on the stock exchanges. Because of this, penny stocks are highly speculative and they bring you higher risk when investing in them. The risk is higher because if a stock is listed then there are some regulations that the company must satisfy. And, the penny stocks which are not listed do not meet the regulation. They are simply sold outside the stock exchange and the investors can be very cautious about them.

Penny Stocks Have A Low Market Cap

Another consideration of penny stocks is its market capitalization. Market capitalization is market value of a single stock from a certain company multiplied with the number of all stocks issued by the same company and can be found on the market. For example, if some company has issued 10,000 stocks and market value of the stocks is $10 than we can calculate market capitalization of 100,000.

So if some stock has market capitalization below $300 million than it is considered as penny stock. And if market capitalization of some stocks is below $50 million they can be considered as nano-cap stocks.

Penny Stocks Are Highly Speculative

In the previous example the stocks from the company can be considered as penny stocks because the market capitalization is below $300 million. They are also nano cap stocks although the price is not lower than $5. We should also state that there is high risk in investing in these stocks. They are not under regulatory control of stock exchanges, although the SEC does oversee their trading. These are highly speculative and this is why they are avoided by most conventional stock market investors.

NYSE to kill sub-penny rule, relist stocks - Reuters

Boston Globe (registration)

NYSE to kill sub-penny rule, relist stocks Reuters - Nov 14, 2008 N: Quote, Profile, Research, Stock Buzz), said it received approval from the US Securities and Exchange Commission to relist the securities starting Monday. ... Stock futures drop; Intel eyed after warning Reuters RPT-IPO VIEW-KKR delay signals tough road for financial IPOs Reuters all 2,522 news articles

UPDATE 1-DHT Maritime Q3 profit below Street, raises dividend - Reuters

UPDATE 1-DHT Maritime Q3 profit below Street, raises dividend Reuters - 18 hours ago N: Quote, Profile, Research, Stock Buzz), reported a quarterly profit that missed estimates by a penny, but the operator of double hull tankers used for ...

The Huge Hidden Cost of Buy and Sell - Motley Fool

The Huge Hidden Cost of Buy and Sell Motley Fool - Nov 17, 2008 If you've ever pulled up a detailed stock quote, you may have noticed that two prices come up. One, called the bid price, is what a buyer has agreed to pay ...

Dividend.com: TJX Slims Down - TheStreet.com

Dividend.com: TJX Slims Down TheStreet.com - Nov 11, 2008 CB Richard Ellis(CBG Quote - Cramer on CBG - Stock Picks) , the world's No. 1 provider of commercial-real-estate services, has filed to sell 50 million ...

How financial meltdown would affect insurance prices - Vanguard

Vanguard

How financial meltdown would affect insurance prices Vanguard, Nigeria - 11 hours ago Companies will have to reevaluate their growth strategies in the face of falling stock prices. There be a spiral whether in the price of goods and services ...