Verified VCDS User
- Nov 7, 2017
- Reaction score
- Bay Area, CA
- VCDS Serial number
Wow, those are dangerous stocks to try to jump on... sub-penny. I mean as a general rule, OTC pennies are a dangerous place to dabble... even moreso those that are sub-penny.
'Rumors' start circulating that so and so is going to buy that ticker, do a 'reverse-merger' or turn the dead ticker into a SPAC, and people want to jump on it while it's still a fraction of a penny whether or not the rumor is true. Or, it's just a bunch of people purely playing pump and dump.
Most brokers won't even let you put money on those stocks for a reason... At least the non-current ones. Caveat Emptor.
I will say I do understand the attraction... IF you get on one early enough that does genuinely take off because it's actually not a total trash company like most OTC pennies, the multiplicative effect of your investment from being a fraction of a penny to even getting to worth a couple cents is actually quite large... let alone making it all the way to a whole dollar.
If you want a good, semi-recent example of this, look up TSNPD. It was TSNP, a defunct tile company called Tesoro Enterprises. A Fintech company called Humbl took it over as a reverse-merger as a cheap way to get themselves listed instead of doing an IPO, have filed for a ticker change as well, it ran from fraction of a penny to above a dollar in a hurry... If you were on that train early, you made a lot of money...
But the OTC is filled with wild rumors like that, 99% of which don't turn out like TSNP->HMBL. They shoot up on the rumor, then the price selloff is sometimes just as rapid... and the bottom is very, very low for these stocks... as in hundredths of a penny low. Generally speaking, if you buy while it's spiking up, you're almost certainly too late to the party and it will likely blow up your account quickly if you buy at that moment. You have to be pretty dang deep into watching that market for filings, news and rumors for it to actually pay off. Very easy to get burned.
OTC pennystocks you really have to play by the 'buy the rumor, sell the news' philosophy.