Cash App Investing generally defines a penny stock as any stock that trades for less than $4 per share and/or publicly traded company with a market capitalization of less than $300M. Cash app offers access to some stocks that meet this definition and that are traded on major exchanges like the New York Stock Exchange (NYSE).
Because penny stocks may be riskier than other stocks, we wanted to explain some of the risks they may pose to investors. These include the following.
Extreme Price Fluctuations
Penny stocks can be highly susceptible to sudden changes in price. Their lower price per share and/or market cap, may also make them more vulnerable to changes in investor sentiment.
Trading Halts
Trading halts temporarily stop all buying and selling of a company’s stock. They occur when a stock moves down XX% within X amount of time. Designed as a way to protect investors against panic selling, halts can result in trades being canceled or stocks being sold at a less desirable price. Because of the higher price volatility risk of penny stocks they can be more likely to be subject to a trading halt.
Bankruptcy
Penny stock companies may be more susceptible to bankruptcy. Bankruptcy may result in holders of common stock (i.e. Cash App Investing investors) losing all of their investment in the company. Additionally, in the event that a publicly traded company files for bankruptcy, NYSE and Nasdaq may elect to de-list companies from their exchanges. Cash App Investing does not currently support stocks that are not listed on either NYSE or NASDAQ. If you hold shares in a de-listed company you may not be able to sell easily or at all.
De-listing
Penny stock companies may also be at higher risk of failing to meet the listing requirements for the NASDAQ or NYSE and could be de-listed by those exchanges. Cash App does not support trading in de-listed companies. If you hold shares in a de-listed company you may not be able to sell easily or at all.
Brokerage services by Cash App Investing LLC, member FINRA/SIPC, and a subsidiary of Block, Inc. formerly known as Square, Inc. Investing involves risk; you may lose money. Please see the Cash App Investing disclosures.
Cash App Investing may add, remove, or change the securities it supports at any time in its sole discretion.
Cash App Investing is a self-directed service; you are solely responsible for orders placed through your account. Cash App Investing does not provide investment advice or recommendations. Fractional shares investing may involve additional risks such as non-transferability. For additional information regarding the unique risks and limitations of fractional shares, please see your Investing Customer Account Agreement.
Fees for stocks may apply such as regulatory transactional fees and external account transfer fees, please see the investing House Rules for further information.
