Most people think of penny stocks as fly-by-night companies that see explosive moves and then fade off into the sunset of a massive sell-off. While that may be true for some of these cheap stocks, it isn’t true for all of them. In fact, if you’ve traded this market over the last year, you’ve likely seen the complete opposite.
The pandemic sent many “big name” companies plummeting last year. Many of them ended up dropping below $5 and, as a result, became penny stocks. This ultimately introduced thousands of new investors to the world of low-priced names by default.