There are instances when penny stocks really hit it big. They can score massive deals, and do enough revenue with enough cash to list on a major exchange. That also can come with huge profits for investors. So how can a penny stock actually list on a higher exchange?
In order to be listed on the bigger stock exchanges, companies are scrutinized keenly. Once they pass those tests, they are listed. Such scrutiny is tough for smaller businesses and hence, these companies list on the OTC market. The OTC is far more liberal with regard to its listing requirements. That being said the question remains whether penny stocks can actually list on the bigger exchanges access a larger pool of potential investors.
Penny Stocks Listing On The NYSE Exchange
In this regard, it needs to be mentioned that the NYSE-MKT exchange is a good place to start for such companies. The requirements are far less strident and can help penny stock companies to get their listing with ease. A company would need shareholder capital of $4 million and a listing price of $3 to be listed in this exchange.
However, listing in the NYSE is a bit tougher. This is considering the fact that some of the world’s biggest corporations are listed there. The shareholder equity would need to amount to $50 million. Additionally, the total number of shares to be issued would need to be 1.1 million in total. It would also need to be valued at a minimum of $100 million.
Penny Stocks Listing On The Nasdaq
Nasdaq is also one of the biggest stock exchanges in the world. But there are plenty of mid cap and small cap companies which are listed on the exchange. In order to be listed on Nasdaq, there are three different criteria. A company would need to fulfill any one of those.
The stock price cannot be less than $4, the equity of shareholders should not be lower than $5 and there should be at least 1 million shares with a total value of not less than $15 million.
Non-Financial Listing Requirements
However, merely meeting these requirements does not guarantee that the stock is going to be listed NYSE, Nasdaq, and NYSE-MKT. The interest of the market in the company and the company’s reputation within its industry are important factors for NYSE and Nasdaq.
In addition to that, the possibility of the company maintaining financial well being and potential of growth in the future are also looked into. On the other hand, NYSE-MKT looks closely at the company’s ability to earn, the financial situation and the management. Now, when it comes to getting rich with penny stocks, it’s more than just being listed on a higher exchange. Check out some of our penny stock basics articles to understand more dynamics on how to make money with penny stocks.