How do penny stocks get listed on the exchange?

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Thread: How do penny stocks get listed on the exchange?

          
   
  1. #1
    Stance's Avatar
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    Question How do penny stocks get listed on the exchange?

    I'm trying to find out how such small companies ran out of their basement, manage to get investment bankers to take their company public?

    From what I've read, the process is both long and very capital intensive.
    "HEY Panda, we don't take too kindly to your types around here!" "Now skeeter, they ain't hurtin no body"
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  2. #2
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    Subscribed. Would love to know more about this.
    #whatisBLK

  3. #3
    av1atic is offline Member
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    Between OTC's and pink sheets, OTC's have to file with the SEC as well as meet other compliance demands and the pink sheets don't, making pink sheets the easiest to be listed as public penny stock companies.

    As far as getting listed on the pink sheets, all a company has to do is find a broker-dealer who will file a form 211 with FINRA. They just show some basic financial information and provide enough transparency to the firm doing the filing.
    Investment banks/large investors typically don't touch these companies, so they must be highly incentivized since the companies are so desperate to receive funding. Funding options include PIPE deals and toxic financing, where they either get large amounts of common stock at a very high discount to market value or receive higher than average interest on debt that they issue to the company. Another obvious way is through paid stock promotions AKA pump and dumps, which happen daily. Management usually seeks stock promoters who hype up the stock for a set period and pay these promoters either through cash or shares of stock. Management and these pumpers then sell the shares to clueless "investors" as the shares spike in value. All of these options typically screw shareholders by excessively diluting the stock and even put management in a tough corner if toxic debt is involved.

    The beginning stages of these companies are pretty ugly, that's why most penny stocks are and remain crap forever. It's such a hated and ignored topic in the investment community that finding more about it is pretty difficult.
    unitix, Stance, pastrana and 2 others like this.

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  5. #4
    Stance's Avatar
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    Thanks
    "HEY Panda, we don't take too kindly to your types around here!" "Now skeeter, they ain't hurtin no body"
    “Jessie, you asked me if I was in the meth business or the money business. Neither. I'm in the empire business.” –Walter White
    "Act as if... " - The boiler room

  6. #5
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    You can also buy a currently listed stock and change directions.....

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