Why? I guess its something to do with rules about penny stocks. but in the modern world theres no reason why we can't have stocks at $0.00002.
I'm guessing this is a USian thing? here in the uk stocks are regularly priced under £2.
Lloyds Bank is a ftse 100 company currently below 45p
I believe for DIJA if they have a valuation under $2 for longer than a year they get delisted.
This doesn't mean you can't trade them anymore, they just become OTC (over the counter) stocks. Many brokers offer access to OTC stocks, but liquidity is a real concern with those stocks.
> For example, on the New York Stock Exchange (NYSE), if a security's price closed below $1.00 for 30 consecutive trading days, that exchange would initiate the delisting process.
It can be avoided via a "reverse stock-split", which seems to be easy enough to get approved (no owners of the stock want to be delisted!), so nothing hugely dangerous... But it's not a good sign for you company's general health I guess.
It's bad enough when stocks like GameStop were treated like a meme and turned into a casino game- you could create an entire industry out of doing that to sub-penny stocks because the low price per share makes even small changes in price very impactful.
It's likely just because for legacy reasons exchanges can't handle fractions of a cent, so below $1 the price becomes too discrete
again, people don't buy stocks with actual physical cash. theres no reason why we are tied to whole pennies. a 2c stock could rise or fall 1% in the same way as a $2 stock could.
plus lowering the number of shares in circulation isn't going to make it less susceptible to pump and dumps.
finance is populated by a lot of extremely well paid people, I can't believe everyone has a blind spot around 'bigger arbitrary token size == better'
To put in bluntly. If you're letting human factors get involved your doing it wrong.
if you have 100,000 shares in circulation at $10 each you have a market cap of $1,000,000.
the same as if you had 10 x $100,000 shares, or 1,000,000 x $1 shares.
but why the rule? theres no reason why my $1 share can't rise 0.1% just like the $10 share. they don't hand me a 1/10th penny coin. so why arbitrarily decide that stocks below $x are bad?
yes a 1c movement is proportionately more, but if youre saying that humans are so obviously psychologically anchored by such round numbers, then the least of humanities problems, and finances, and capitalisms, is the price of a share.