Guides · Stocks, ETFs and markets
Penny stocks: shares worth a few cents, a bargain?
In short: A penny stock is a share worth very little per unit (often under one dollar). The small price is attractive, but these stocks are often thinly traded, very volatile and easy to manipulate.
Unit price doesn't matter
A $0.10 share is not "cheaper" than a $500 one. What matters is the company's value relative to its earnings.
Manipulation
Pump-and-dump schemes often target these stocks: enthusiastic messages push the price up, then the organisers sell.
Liquidity
Few buyers and sellers: you may struggle to sell at the displayed price.