Do the nasdaq small cap stocks or penny stocks get promoted?
"The penny/pink sheet stocks you tend to see promoted are the ones a) with small public floats or, b) they are thinly traded.  This means that any appreciable change in buy/sell volume will have an outsized effect on the stock's share price, even when the underlying fundamentals are not so great.  Promoters are frequently paid based on how much they can move a stock's price, but such moves are not long-lasting.  They peter out when the trading volumes return to more normal ranges for the stock because all of the hype has died out. There are some small-cap NASDAQ stocks which can be susceptible to promotion for the same reason -- they have small floats and/or are thinly traded.  Once someone figures out the best targets, they'll accumulate a position and then start posting all kinds of ""news"" on the web in an effort to drum up interest so they can sell off their position into the buying that follows.   The biggest problem with penny/pink sheet stocks is that they frequently fail to publish reliable financial statements, and their ownership is of a dubious nature.  In the past, these types of stocks have been targeted by organized crime syndicates, which ran their own ""pump and dump"" operations as a way to make relatively easy money.  This may still be true to some extent today.   Be wary of investing in any publicly-traded firm that has to use promoters to drum up investor interest, because it can be a serious red flag.  Even if it means missing out on a short-term opportunity, research the company before investing.  Read its financials, understand how it has behaved through its trading history, learn about the products/services it is selling.  Do your homework.  Otherwise you are doing the investing equivalent of taking your money and lighting it on fire. Remember, there's a good reason these companies are trading as penny/pink sheet stocks, and it generally has nothing to do with the notion (the promoters will tell you) that somehow the ""market has missed out on this amazing opportunity.""  Pump and dump schemes, which lie at the heart of almost all stock promotion, rely on convincing you, the investor, that you're smart enough to see what others haven't.  I hope this helps. Good luck!" Promotion of any stock should be treated with extreme suspicion, since the purpose is generally to make money for the promoter, not to inform the public.
"A stock split can force short sellers of penny stocks to cover their shorts and cauuse the price to appreciate.  Example:  Someone shorts a worthless pump and dump stock, 10,000 shares at .50.  They have to put up $25,000.00 in margin ($2.50 per share for stocks under $2.50).  The company announces a 3 to 1 split.  Now the short investor must come up with $50,000.00 additional margin or be be ""bought in"". The short squeeze is on." Well Company is a small assets company for example it has 450,000,000 shares outstanding and is currently traded at .002. Almost never has a bid price.  Compare it to PI a relative company with 350 million marker cap brokers will buy your shares.  This is why blue chip stock is so much better than small company because it is much more safer. You can in theory make millions with start up / small companies.  You would you rather make stable medium risk investment than extremely high risk with high reward investment  I only invest in medium risk mutual funds and with recent rallies I made 182,973 already in half year period. Most penny stocks go to zero because most businesses fail.  You stated in your original post that you were wondering specifically about companies with no assets. These are exactly the kind that fail and go to zero.  There are many holes within the regulatory structure that allow for many accounting tricks in penny stock land. And even in areas that are adequately regulated, there will be few to no remedies for the optimistic penny stock shareholder speculator. There's a case to be made that companies below a certain market cap have more potential than the higher ones.  Consider, Apple cannot grow 100 fold from its current value. At $700B or so in value, that would be a $70T goal, just about the value of all the combined wealth in the entire US. At some point, the laws of large numbers take over, and exponential growth starts to flatten out.  On the flip side, Apple may have as good or better chance to rise 10% over the next 6-12 months as a random small cap stock. "Below is just a little information on short selling from my small unique book ""The small stock trader"":  Short selling is an advanced stock trading tool with unique risks and rewards. It is primarily a short-term trading strategy of a technical nature, mostly done by small stock traders, market makers, and hedge funds. Most small stock traders mainly use short selling as a short-term speculation tool when they feel the stock price is a bit overvalued. Most long-term short positions are taken by fundamental-oriented long/short equity hedge funds that have identified some major weaknesses in the company. There a few things you should consider before shorting stocks: Despite all the mystique and blame surrounding short selling, especially during bear markets, I personally think regular short selling, not naked short selling, has a more positive impact on the stock market, as: Lastly, small stock traders should not expect to make significant profits by short selling, as even most of the great stock traders (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen,) have hardly made significant money from their shorts. it is safe to say that odds are stacked against short sellers. Over the last century or so, Western large caps have returned an annual average of between 8 and 10 percent while the returns of small caps have been slightly higher.  I hope the above little information from my small unique book was a little helpful! Mika (author of ""The small stock trader"")" I traded penny stocks for a bit then switched over after I found out the bitcoin I bought was worth $1400 each years ago when it first inflated. Now I trade BTC, LTC and NMC. Only trading coins I believe in and will be around long term. Shorting penny stocks is very risky.  For example, read this investopedia article, which explains some of the problems.  In general: If you have some sort of method for perfectly identifying Pump and Dump schemes, it's possible you could make money if you time things right, but that timing is going to be very difficult to identify. "That's like a car dealer advertising their ""huge access"" to Chevrolet.  All brokers utilize dark pools nowadays, either their own or one belonging to a larger financial institution.  Why?  Because that's a primary source of broker income.  Example: Under current US regulations the broker is under no obligation to pass these orders to actual (a.k.a. lit) exchanges.  Instead it can internalize them in its dark pool as long as it ""improves the price"".  So: If a broker doesn't run its own dark pool, then it sends the orders to the dark pool run by a larger institution (JPMorgan, Credit Suisse, Getco, Knight Capital) and gets some fraction of the dark pool's profit in return. Are Mom and Pop negatively impacted by this?  Not for most order types.  They each even got a free penny out of the deal!  But if there were no dark pools, that $1.00 difference between their trade prices would have gone half ($0.50) to Mom's counterparty and half ($0.50) to Pop's counterparty, who could be someone else's Mom and someone else's Pop. So ... that's why brokers all use dark pools, and why their advertisement of their dark pool access is silly.  They're basically saying, ""We're going to occasionally throw you a free penny while making 49 times that much from you""! (Note: Now apply the above math to a less liquid product than AAPL.  Say, where the spread is not $0.01, but more like $0.05.  Now Mom and Pop still might make a penny each, while the broker can make $4.98 on a 100 share trade!)" Extremely low volume and market cap is a big problem, especially when the information about the company is well hidden. Most penny stocks are shell corps with someone manipulating the prices.   Although there are some big companies that sell different kind of shares on the otc market which might be worth looking into "Investing is not the same as illegal drugs.  One does not start with pot and progress to things like heroin in order to get a better high.  Penny stocks are a fools game and not an entry into the world of investing. The charts you mentioned are fake and likely the result of pump and dump schemes as my colleagues have pointed out in the comments.  They have no bearing on investing.  Good investment grade companies have many peaks and valleys over time.  Look at any company you are familiar with Apple, Google, Tesla, GE, Microsoft, etc... One has a few choices in getting ""into investing"" to name a few: All of those are valid and worthy pursuits.  Read books by Jack Bogle." Small companies could have growth prospects. Large companies may not have that many. So look at ROE of companies by quatile to determine which companies have better growth. I don't quite understand the NYSE argument that the credit system helps NASDAQ undercut NYSE on pricing and force brokers to trade on NASDAQ. I thought if you were trading a stock listed on NASDAQ, you traded through them and if you were trading a stock listed on NYSE, you'd trade over there. The choice of exchange coming down to the stocks you want to trade more than anything. Are the exchanges also acting as endpoints on trades for securities listed on the other exchange? "If you look at the biotech breakdown, you'll find a lot of NAs when it comes to P/E since there are many young biotech companies that have yet to make a profit.  Thus, there may be something to be said for how is the entire industry stat computed. Biotechnology can include pharmaceutical companies that can have big profits due to patents on drugs. As an example, look at Shire PLC which has a P/E of 1243 which is pretty high with a Market Capitalization of over a billion dollars, so this isn't a small company.  I wonder what dot-com companies would have looked like in 1998/1999 that could well be similar as some industries will have bubbles you do realize, right? The reason for pointing out the Market Capitalization is that this a way to measure the size of a company, as this is merely the sum of all the stock of the company.  There could be small companies that have low market capitalizations that could have high P/Es as they are relatively young and could be believed to have enough hype that there is a great deal of confidence in the stock.  For example, Amazon.com was public for years before turning a profit.  In being without profits, there is no P/E and thus it is worth understanding the limitations of a P/E as the computation just takes the previous year's earnings for a company divided by the current stock price.  If the expected growth rate is high enough this can be a way to justify a high P/E for a stock.  The question you asked about an industry having this is the derivation from a set of stocks.  If most of the stocks are high enough, then whatever mean or median one wants to use as the ""industry average"" will come from that." looking over some historical data I cannot really a find a case where a stock went from $0.0005 to $1 it almost seem that once a stock crosses a minimum threshold the stock never goes back up. Is there any truth to that? That would be a 2000X (200,000%) increase in the per-share value which would be extraordinary.  When looking at stock returns you have to look at percentage returns, not dollar returns.  A gain of $1 would be minuscule for Berkshire-Hathaway stock but would be astronomical for this stock,. If the company is making money shouldn't the stock go up? Not necessarily.  The price of a stock is a measure of expected future performance, not necessarily past performance.  If the earnings had been more that the market expected, then the price might go up, but if the market sees it as an anomaly that won't continue then there may not be enough buyers to move the stock up. looking at it long term would it hurt me in anyway to buy ~100,000 shares which right now would run be about $24 (including to fee) and sit on it? If you can afford to lose all $24 then no, it won't hurt.  But I wouldn't expect that $24 to turn into anything higher than about $100.  At best it might be an interesting learning experience. "Penny stocks are only appealing to the brokers who sell the penny stocks and the companies selling ""penny stock signals!"". Generally penny stocks provide abysmal returns to the average investor (you or me). In ""The Missing Risk Premium"", Falkenstein does a quick overview on average returns to penny stock investors citing the following paper ""Do Investors Overpay for Stocks with Lottery-Like Payoffs? An Examination of the Returns on OTC Stocks"". Over the 2000 to 2009 time period, average investors lost nearly half their investment. A comparable investment in the S&P over this period would have been flat see here. There is a good table in the book/paper showing that the average annual return for stocks priced at either a penny or ten cents range from -10 percent (for medium volume) to -30% to -40% for low or high volume.  A different paper, ""Too Good to Ignore? A Primer on Listed Penny Stocks"" that cites the one above finds that listed, as opposed to OTC ""Pink Sheet"" penny stocks"", have better returns, but provide no premium for the additional risk and low liquidity.  The best advice here is that there is no ""quick win"" in penny stocks. These act more like lottery tickets and are not appropriate for the average investor. Stear clear!"