Penny stock

Penny stocks are common shares of small public companies that trade for less than five dollars per share. The U.S. Securities and Exchange Commission (SEC) uses the term "penny stock" to refer to a security, a financial instrument which represents a given financial value, issued by small public companies that trade at less than $5 per share. The term "penny stock" refers to shares that, prior to the SEC's classification, traded for "pennies on the dollar". In 1934, when the United States government passed the Securities Exchange Act to regulate any and all transactions of securities between parties which are "not the original issuer", the SEC at the time disclosed that equity securities which trade for less than $5 per share could not be listed on any national stock exchange or index.

In countries other than the United States, where stock prices are denoted in local currencies, a US$5.00 value does not have any necessary implication. In China, for example, it is common for initial public offerings of large companies to have an offer price of 10-40 Rmb per share, the equivalent of US$1.50-5.50 per share. For example, Yonz Technology Co. Ltd. raised US$191 million by going public on the Shanghai Stock Exchange in June 2024 at an offer price of 23.35 Rmb per share, the equivalent of a little over US$3.00 per share.