Penny Stock

A penny stock is a company's share that trades for less than $5, usually on smaller exchanges rather than major ones like the NYSE. You'll mostly encounter these when browsing discount brokers or online forums—they're appealing because you can buy many shares for little money, but that's also where the danger lies. These companies are often newer, riskier, or less regulated than big-name stocks, meaning their prices can swing wildly and information about them is harder to find. For example, someone might buy 1,000 shares of a penny stock for $200, hoping it'll skyrocket—but it could just as easily become worthless. They're exciting to beginners, but require extra caution and research.