Penny Stocks - The Price And Market Capitalization

When we are talking about the penny stocks we can describe them as stocks that have very low value, highly speculative stocks, unlisted on the stock exchange, and with small market capitalization. If a stock has any of these it can be called penny stock.

Penny stocks does have very low value. But, it is very difficult to say how low the value should be for some stock in order to be described as penny stock. There are a lot of opinions about the price of the stocks.

Penny Stocks Have Low Value

So, in general, if the price is really low then we are talking about penny stocks. Some says that the stocks with a price below $5 per stock are penny stocks. Other people are saying that all stocks with value below $3 are considered as penny stocks. And also there are some other people which claim that a stock is penny stock if its value is below $1.

Penny Stocks Are Not Listed On The Stock Exchanges

Penny stocks are also not listed on the stock exchanges. Because of this, penny stocks are highly speculative and they bring you higher risk when investing in them. The risk is higher because if a stock is listed then there are some regulations that the company must satisfy. And, the penny stocks which are not listed do not meet the regulation. They are simply sold outside the stock exchange and the investors can be very cautious about them.

Penny Stocks Have A Low Market Cap

Another consideration of penny stocks is its market capitalization. Market capitalization is market value of a single stock from a certain company multiplied with the number of all stocks issued by the same company and can be found on the market. For example, if some company has issued 10,000 stocks and market value of the stocks is $10 than we can calculate market capitalization of 100,000.

So if some stock has market capitalization below $300 million than it is considered as penny stock. And if market capitalization of some stocks is below $50 million they can be considered as nano-cap stocks.

Penny Stocks Are Highly Speculative

In the previous example the stocks from the company can be considered as penny stocks because the market capitalization is below $300 million. They are also nano cap stocks although the price is not lower than $5. We should also state that there is high risk in investing in these stocks. They are not under regulatory control of stock exchanges, although the SEC does oversee their trading. These are highly speculative and this is why they are avoided by most conventional stock market investors.

Spam King Makes Jail Break (WebProNews)

A man dubbed "The Spam King" has escaped from a minimum-security federal prison in Colorado. Edward "Eddie" Davidson, 35 was sentenced in April to 21 months in prison for sending massive amounts of unsolicited fraudulent emails promoting penny stocks as good investments. Davidson was also ordered to pay $714,139 in restitution to the Internal Revenue Service and ordered to turn over gold ...

'Spam King' Escapes from Prison in Colorado (Enterprise Security Today)

The man known as "The Spam King" walked away from a minimum-security federal prison Sunday in Florence, [Colorado], and was last seen in [the Denver suburb] Lakewood. Edward "Eddie" Davidson, 35, was sentenced in April to serve 21 months in prison for his role in sending hundreds of thousands of unsolicited fraudulent e-mails touting certain penny stocks as excellent investments. Davidson also ...

Fugitive spam king dead in apparent murder-suicide (Network World)

Convicted penny-stock spammer Eddie Davidson has died of a self-inflicted gunshot wound, apparently after killing his wife and three year-old daughter in his home town of Bennet, Colorado, the U.S. Department of Justice said Thursday

Escaped Spam King Kills Self, Family (WebProNews)

Only four days after escaping from a federal minimum-security prison in Florence, Colorado "Spam King" Eddie Davidson was found dead from a self inflicted gunshot wound. read more

Fujitive 'spam king' shot dead (PC Advisor)

Convicted spammer dies of gunshot wound Convicted penny-stock spammer Eddie Davidson has died of a self-inflicted gunshot wound, apparently after killing his wife and three year-old daughter in his home town of Bennet, Colorado, the US Department of Justice has announced.