you cannot predict the future of a penny stock. business model, sales margin, profit margin, market cap, etc. But without any proper information and analysis i.e. Due to their check price they can easily be manipulated. You may find that many penny stocks jump to 500% within one year and many correct up to 500% within one year. Penny stocks show extreme price volatility of 50% to even 100% in a single trading session of one day.
Read also: penny stocks: Latest News on penny stocks.Read also: Which penny stocks are worth investing in India?.Without reliable financial data as mentioned above investing in penny stocks is like gambling.You will not get any coverage about the business model, revenue model, expansion of business, etc.BSE and NSE for non-compliance with the requirements of the stock exchange and SEBI. There are several instances when penny stocks have been delisted by SEBI from the stock exchanges i.e.Penny stocks lack trustworthiness as they are not registered with major stock exchanges like NSE, BSE, Nasdaq or NYSE, etc.
But after the bankruptcy announcement, stocks may continue to trade on the stock market for weeks or months, and traders can still buy and sell the shares, which can cause problems for uninformed investors. Any remaining assets are sold to pay back the banks and other creditors. The biggest risk is that when a penny stock company goes bankrupt, its shares typically are eventually cancelled and become worthless.The risk associated with the investment in penny stocks are as follows,
Penny stocks have a very low trading volume with low liquidity or a lack of liquidity. These penny stocks do not fit the stringent regulations by the major stock exchanges like NSE, BSE, Nasdaq, etc. These companies possess very low market capitalization. Penny stocks are defined as those stocks which trade at a very low price i.e. First of all, let’s understand what penny stock is.
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