Definition of penny stock
: a usually unlisted highly speculative stock usually selling for a dollar or less
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More:Ask a Fool: Are there any penny stocks worth buying?
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Some cryptocurrency pioneers think alt-coins are thus more like penny stocks—ones that get talked up by shysters to lure in naive investors, who get fleeced.
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CloudCommerce is a penny stock, meaning its shares do not trade on a major stock exchange and can be bought for just pennies a share.
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The penny stock gold miner -- which hasn’t made an annual profit in 13 years as a public company -- is selling a 98-acre patch of land next to the Silver Springs Airport outside Reno, Nevada.
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The company, which trades over the counter as a penny stock, earned no revenue in 2015 or 2016, according to S.E.C. filings.
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Yet cryptocurrencies, such as Bitcoin, are also a bubbly, frothy, and overhyped phenomenon—a latter-day version of a penny stock, boosted by drug dealers, digital evangelists, Wall Street types, and a large twinset of Harvard rowers.
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What many investors don't realize is that what appear to be news stories about these companies are actually paid promotional materials by professional entities that specialize in raising awareness of penny stocks.
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Contrary to their name, penny stocks rarely cost a penny.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'penny stock.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of penny stock
circa 1920
Financial Definition of PENNY STOCK
penny stock
What It Is
Penny stocks are small-cap equity shares that trade in the over-the-counter market for prices between several cents and ten dollars.
How It Works
Penny stocks are usually issued by small or micro-cap companies to raise capital. The term "penny" is used to denote the low prices of such stocks, as well as their low market capitalizations. There are various viewpoints about what price level qualifies a stock as a penny stock. However, the accepted range is between several cents to ten dollars.
The low price of penny stocks, as well as the volatility of their price movements, reflects their high level of associated risk. Such stocks are not traded in mainstream equities markets and must be purchased and sold in a special market called the over-the-counter (or OTC) market. Often times, investors purchase penny stocks as speculative instruments, hoping to profit from short-term price movements.
Why It Matters
The volatility that often surrounds small-cap stocks makes them an attractive avenue for some speculative investors. The extremely low prices of penny stocks make it relatively easy for small individual investors to purchase large quantities of shares, while the high volatility of these stocks may present an opportunity for quick profits on rapid price movements. Penny stocks are generally considered to be a highly speculative form of investment and suitable only for investors with a high appetite for risk.
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