So, The Lower The Price, If Something Is Trading In Pennies And Its Trading From $0.05 To $0.06, For Example, That Penny Spread Represents 16 Percent.

They may exist in name still, but they dont exist in terms of the business model they used to have. Because of that, there’s no clear path for a company to make the transition from private to public, unless it has already succeeded at becoming a $100 million or $1 billion enterprise like Snap Inc /quotes/zigman/86364478/composite SNAP -1.76% . [To make things worse], there are also no investment banks to advise the entrepreneurs why they need to focus on their stock price, not from the perspective of whether it’s going up or down, but making sure the capital structure allows for a price that will be better for the company moving forward in terms of the optics that it creates. Alternative Mechanisms Bocskor: As a result, we find many companies exploring this Medical marijuana other mechanism, this back door to being publicly traded through reverse mergers or through Form 10 filings, etc., that were not the traditional mechanism that provided for an orderly and well-run market. As such, we see smaller companies that tend to be in the lower prices because the traders that trade and make the markets there like the additional revenue they can get based upon the spread that exists in the bid and ask on the small, lower priced stocks. So, the lower the price, if something is trading in pennies and its trading from $0.05 to $0.06, for example, that penny spread represents 16 percent. If a trader can capture that 16 spread spread, thats a very profitable area to be. So, they tend to be friendlier to companies with these lower prices. I think its terrible. I would like to see these companies trading for $1 or $5, $15, $30 a share, which I think will be where they will be in the coming years. Breaking The Prejudice Bocskor: The point is there is a prejudice against low priced stocks that I think we need to get away from as an industry and start looking towards reverse splitting our stocks, having fewer numbers of shares and higher prices because the optics on it are better.

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