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

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 More:Ask a Fool: Are there any penny stocks worth buying? — Matthew Frankel, USA TODAY, "Ask a Fool: When will my dividend stocks actually pay me?," 29 Mar. 2018 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. — Kotryna Zukauskaite, Smithsonian, "What the Founding Fathers’ Money Problems Can Teach Us About Bitcoin," 20 Mar. 2018 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. — Washington Post, "Trump campaign chief lends name to penny stock tied to felon," 27 Feb. 2018 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. — Bloomberg.com, "Trump: Will Be Putting in a Lot More Circuit Judges," 23 Feb. 2018 The company, which trades over the counter as a penny stock, earned no revenue in 2015 or 2016, according to S.E.C. filings. — Kevin Roose, New York Times, "Kodak’s Dubious Cryptocurrency Gamble," 30 Jan. 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

6 Feb 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