Saving Your Pennies: The Increasing Influence of Low-Priced Stocks in U.S. Markets;

ajacobson

ajacobson

Saving Your Pennies: The Increasing Influence of Low-Priced Stocks in U.S. Markets; A closer look at how penny stocks are reshaping Wall Street's landscape; A curious trend
John Ramsay, Chief Market Policy Officer - IEX
Something strange has been happening in the U.S. stock market over the last year, and that something is exemplified by the case of Bit Brothers Limited, a Nasdaq issuer with the symbol "BETS". It may surprise you to know BETS was the most actively-traded stock, by share volume, during the last six months of the year. With a trading price of around one cent per share, BETS' volume ramped up especially in December - during the last week of the month, BETS averaged about two billion shares a day, or 19% of all listed stock volume. On December 27, 3.5 billion shares of BETS traded, amounting to 28% of total volume for that day.
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Related article at the same location:
https://www.iex.io/article/what-the-rise-in-subdollar-stock-volume-means-for-institutional-trading
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RESEARCH / Sep 28, 2023
What the Rise in Subdollar Stock Volume Means for Institutional Trading

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Historically, trading in subdollar symbols was limited to 4-5% of market volume. In the past year, that’s risen to new all-time highs above 15% and stayed consistently in the double digits.

While that still may feel irrelevant in terms of notional volume, in terms of shares traded, it’s become a significant trend.

The Rise in Subdollar Stocks
For starters, there are many more publicly traded stocks <$1 than there used to be.

When a stock goes public, it typically must do so at a share price of at least $4. That means to be an exchange-listed subdollar stock, the stock price must have fallen more than 75% from its IPO price.

In 2022, with inflation and rising interest rates, the market fell substantially, with certain sectors being hit particularly hard and hundreds of stocks falling 75% or more in under a year, thus producing a lot of subdollar stocks.

Though stocks that continue trading under $1 typically become de-listed after a period, there are currently many symbols under $1 that are still part of the National Market System. The number of publicly traded subdollar symbols went from fewer than 100 in 2021 H1 to over 700 in recent months.

[...]
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