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Why Are Penny Stocks No Longer Less Than $1?


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Published in Stocks and Investing on by Investopedia   Print publication without navigation

Discover why the U.S. Securities and Exchange Commission changed penny stock definitions from $1 to $5 per share and how it affects your trading of micro-cap stocks.

Penny stocks, traditionally defined as stocks trading for less than $1, are increasingly trading above this threshold due to several factors including a robust bull market, increased retail investor interest, and the impact of social media and online trading platforms. The article explains that the Securities and Exchange Commission (SEC) considers penny stocks as those trading under $5, which has become a more relevant benchmark as many former penny stocks have seen their prices rise significantly. This shift is attributed to heightened market speculation, the influence of platforms like Robinhood that allow commission-free trading, and the phenomenon of meme stocks driven by social media. The article also notes that while some penny stocks have benefited from these trends, the inherent risks remain high, with many stocks still prone to volatility and potential for significant losses.

Read the Full Investopedia Article at:
[ https://www.msn.com/en-us/money/topstocks/why-are-penny-stocks-no-longer-less-than-1/ar-AA1Go3cB ]

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