The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

Penny stocks definition

Penny stocks are not actually worth a penny but they are the shares of smaller companies with a low value. There’s no official definition of a penny stock, but generally the companies have a market value, known as market capitalisation, of less than £100 million and the individual shares are worth less than 50 pence each. In the US, penny stocks used to trade for below one dollar a share, but are now generally defined as those trading for less than $5 a share.

Penny stocks definition

Penny stocks are not actually worth a penny but they are the shares of smaller companies with a low value. There’s no official definition of a penny stock, but generally the companies have a market value, known as market capitalisation, of less than £100 million and the individual shares are worth less than 50 pence each. In the US, penny stocks used to trade for below one dollar a share, but are now generally defined as those trading for less than $5 a share.

In the UK, you will find penny stocks listed on the London Stock Exchange, particularly on its junior AIM market. As these companies are smaller and often younger companies, there’s a greater risk associated with trading penny stocks, although returns can also be high. Some penny stocks can be highly illiquid, adding to the risks.

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