What are Penny Stocks? How Do Penny Stocks Work?


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What are Penny Stocks? How Do Penny Stocks Work?

What are Penny Stocks? How Do Penny Stocks Work?

Just because you don’t hear about penny stocks every day on CNBC doesn’t mean that penny stocks are without drama — take SCO Group, a software company that brought on the wrath of the world’s computer-literati when it made claims to the UNIX operating system. Unfortunately, penny stocks have also garnered a reputation as a game filled with scams and corruption. Indeed, penny stocks could be your wildest ride yet as an investor.

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The terms “penny stocks” and “micro-cap stocks” can be used interchangeably. Technically, micro-cap stocks are classified as such based on their market capitalizations, while penny stocks are looked at in terms of their price. Definitions vary, but in general, a stock with a market capitalization between and 0 million is a micro cap.

What are Penny Stocks? How Do Penny Stocks Work?
What are Penny Stocks? How Do Penny Stocks Work?