ELI5: Explain Like I'm 5

penny stock

Penny stocks are stocks that cost less than $5 per share and trade on the stock market. They're usually for very small companies that you normally don't hear about in the news. Because penny stocks are usually very cheap, you can buy a lot of shares with a little bit of money. But it also means that they can go up or down by a lot very quickly. Sometimes they go down very quickly and all of your money can be lost!