Probability of $1 Penny Stock Going Bankrupt

[joeydeleon]

Anyone have any statistics/risk analysis on $1 stocks suddenly going bankrupt? Like maybe on a daily basis?

Tried googling but to no avail.

e.g. Out of all Penny stocks that trade upward of 200k shares a day, 2% go bankrupt daily.

Something like that.

 

[oraclewizard77]

90% of all pink sheet stocks go to $ .00001. Most never actually go bankrupt instead the become virtually worthless.

What you also need to look at is outstanding shares. The problem is that these companies print money through dilution which is why the stock price keeps falling. The ones that still provide financial reports will list billions of shares outstanding.

Also, most are scams, they will have PO box and no real office where they claim to be doing business.

 

[JesseJamesFinn]

You also have the real possibility of your Broker charging you a "Re-characterization" fee, if your Pink or Penny Play change's it's name, your subject to fees ranging from $20 to $125.00 due to the paper work and hassles these cause for the DTC charges your Clearing House receives.


The possibility of capturing a giant move like CYNK from $.3 to $3.50 or $10.00 is exciting, almost as exciting as one of the Elite Traders who bought the September $50 PBYI Calls and I hope he is still holding them. There is various research articles showing the odds are most will end up BK, please be safe fellow Trader!

 

[MoreLeverage]

90% of all pink sheet stocks go to $ .00001. Most never actually go bankrupt instead the become virtually worthless.

That strikes me as an exaggeration, or at least misleading(*). For example, a quick check shows that something like 1/4 of OTC stocks are above $1, while about 3/4 are penny stocks. Sure some of the higher ones will go out of business, but a few of the penny stocks will turn into real businesses too and end up in to top group. I do agree that bankruptcy isn't what to focus on - stocks can easily become nearly worthless without BK, and likewise, BK stocks don't always end up worthless and may do some restructuring such that the old equity is still worth something in the post-BK company.

* - would it still be a true statement if you said 90% of all stocks end up virtually worthless? There's a lot of survivorship bias over a long enough time period. For example, it is estimated that 90% of all people that ever lived have died, while the present population is 10% of all humans that ever lived.

 

[oraclewizard77]

The only ones I know who make money on these stocks are the pros and funds that short them.

That strikes me as an exaggeration, or at least misleading(*). For example, a quick check shows that something like 1/4 of OTC stocks are above $1, while about 3/4 are penny stocks. Sure some of the higher ones will go out of business, but a few of the penny stocks will turn into real businesses too and end up in to top group. I do agree that bankruptcy isn't what to focus on - stocks can easily become nearly worthless without BK, and likewise, BK stocks don't always end up worthless and may do some restructuring such that the old equity is still worth something in the post-BK company.

* - would it still be a true statement if you said 90% of all stocks end up virtually worthless? There's a lot of survivorship bias over a long enough time period. For example, it is estimated that 90% of all people that ever lived have died, while the present population is 10% of all humans that ever lived.

 

[JesseJamesFinn]

What did you think of TImmy doing a Promo for $100K?

 

[Crispy]

90% of all pink sheet stocks go to $ .00001.

.0001 is the lowest price point domestic stocks can reach just for the sake of accuracy.

The member who spoke of dilution is right and wrong. Typically they do not create more shares. They simply trade them for debt. They will borrow money, and if they cannot pay it back under the terms within a specified time period the company will issue them restricted stock at basement prices(the terms are largely based off volume and liquidity...etc). then after the stock becomes free and clear look out below....