Penny Stock

A penny stock is a company's share that trades for less than $5 per share, usually on smaller exchanges rather than major ones like the NYSE. You'll encounter these mostly in speculative trading—they're appealing because a small dollar amount can buy you many shares, which feels exciting. However, they matter because they're riskier: these companies are often newer, less regulated, and have thinner trading volume, meaning it's harder to sell when you want to. For example, you might see someone excited about buying 10,000 shares of a penny stock for $500, but that doesn't mean it's a good deal. The low price tag can be deceptive—it often reflects real business uncertainty, not hidden value.