penny stock


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 Fort Worth oilfield service company Basic Energy Services is now a penny stock after being delisted from the New York Stock Exchange. Sergio Chapa, Houston Chronicle, "Basic Energy Services delisted from New York Stock Exchange," 3 Dec. 2019 Bre-X, previously a penny stock, became an overnight success and rose to more than $250 per share. Aaliyah Gibson,, "Scams and shams: The biggest frauds in business," 1 Nov. 2019 From the South Sea Bubble of 18th century England to penny stock schemes peddled by the Wolf of Wall Street, investors have often been burned by opportunities too good to be true. Matthew De Silva, Quartz, "Why crypto hoaxes are so successful," 26 Sep. 2019 On Facebook, there are a variety of groups dedicated to trading everything from penny stocks to cryptocurrencies on Robinhood. David Ingram, NBC News, "With confetti and cryptocurrency, stock app Robinhood nudges investors toward risk," 12 Sep. 2019 Policing thousands of penny stocks, however, is beyond their reach. Justin Rohrlich, Quartz, "The FBI thinks Long Island Iced Tea’s infamous pivot to blockchain was sweetened by insider trading," 25 July 2019 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

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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First Known Use of penny stock

circa 1920, in the meaning defined above

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Time Traveler for penny stock

Time Traveler

The first known use of penny stock was circa 1920

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Statistics for penny stock

Last Updated

3 Jan 2020

Cite this Entry

“Penny stock.” The Dictionary, Merriam-Webster Inc., Accessed 18 January 2020.

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More Definitions for penny stock

penny stock


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

Legal Definition of penny stock

see stock

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