penny stock

noun

Definition of penny stock

: a usually unlisted highly speculative stock usually selling for a dollar or less

Examples of penny stock in a Sentence

Recent Examples on the Web

The clothing initiative might not be enough to save 117-year-old J.C. Penney, a literal penny stock these days that's trading for less than 60 cents a share. — Megan Cerullo, CBS News, "J.C. Penney's rebuilding strategy? Sell secondhand clothing," 15 Aug. 2019 For many of them, the penny stock market is like a lottery. — Justin Rohrlich, Quartz, "The FBI thinks Long Island Iced Tea’s infamous pivot to blockchain was sweetened by insider trading," 25 July 2019 Since its 2017 public offering at $10, Blue Apron APRN 5.88% shares have gone nowhere but down, reaching penny stock status in December. — Laura Forman, WSJ, "Cliff Diving at Blue Apron," 6 Apr. 2019 This week is exactly 10 years since the vomit-inducing moment when the S&P 500 hit an intraday low of 666 (rounding down), Citigroup became a penny stock and General Motors was considering bankruptcy. — James Mackintosh, WSJ, "Why It’s So Hard to Buy the Market at the Bottom and Hang On," 7 Mar. 2019 Helios has been delisted from the Nasdaq for failing to comply with the exchange’s minimum share-price rules and now trades over the counter as a penny stock. — Tatyana Shumsky, WSJ, "MoviePass Owner Names Interim Finance Chief," 21 Mar. 2019 No specific penny stocks were named in the SEC's order, which calls for a hearing on the matter and demands that Wedbush answer the commission's charges within 20 days. — James Rufus Koren, latimes.com, "L.A.'s Wedbush charged with failing to supervise stockbroker who SEC says was involved in penny-stock scam," 28 Mar. 2018 A decade ago, Petropavlovsk was worth $3 billion and was mentioned as a future member of the benchmark FTSE 100 Index, but sinking gold prices and management missteps reduced it to a penny stock. — Thomas Biesheuvel, Bloomberg.com, "A Crypto Tycoon, Banking Heir and the Mysterious Fight for Gold," 14 May 2018 The companies are all little-known, penny stocks that trade over the counter: PDX Partners, Cherubim Interests and Victura Construction Group. — Mike Rogoway, OregonLive.com, "SEC suspends trading in companies run by former Oregon football star over cryptocurrency 'concerns'," 16 Feb. 2018

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.

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Last Updated

12 Sep 2019

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The first known use of penny stock was circa 1920

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More Definitions for penny stock

penny stock

noun

Financial Definition of 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.

Source: Investing Answers

penny stock