What happens to a company when the stock becomes worthless?
For example, if you buy into a penny stock at $ 0.04 and then the companies stock decreases to 0.03 then 0.02, 0.01 and eventually 0.00. When a stock becomes valued at $ 0.00 what happens to the company? What happens to the investor?
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Answer by John W
You've got that backwards, the company became worthless hence the stock becomes worthless not the other way around. Nothing happens to the investor, he just winds up owning shares in a worthless company, mind you the reason why they're trading for pennies is that the possibility that they might make it big multiplied by the probability that they might make it big results in mere pennies if you're lucky in value.
Note that penny stocks are difficult to trade in because of liquidity issues, the possibility of price manipulations, the fact that these companies are either barely starting up or on their way out, they're too small for most numerical indicators to have any meaning and the difficulty in researching relatively unknown companies. If you're asking something as basic as what happens when the stock becomes worthless, you really shouldn't be thinking of penny stocks.
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