Investopedia and most finance textbooks define any security trading as less than a dollar as a penny stock. Here is why: If a stock listed on the NASDAQ fails to meet a closing bid price of $1 for at least 30 consecutive days, it is delisted. If a stock listed NYSE trades for under $1 for 29 consecutive days, the company must, within 10 days, submit a plan to the NYSE to move the stock into the $1 territory within a short period of time or it is delisted. The Nasdaq has 3430 companies. The NYSE has 3136 companies. The Amex has 322 companies. Together, the 3 make up well over 95% percent of the publicly traded stock market. Thus the problem with penny stocks is that they can be delisted and then you become a bag holder.
