are penny stocks on nasdaq? Quick Guide

Are penny stocks on nasdaq? This guide answers whether stocks commonly called “penny stocks” can be listed on Nasdaq, explains why that matters for investors, and shows practical screening, risks, ...

2025-12-22 16:00:00

By Alex Carter

Article rating

4.7

117 ratings

Bitget offers a variety of ways to buy or sell popular cryptocurrencies. Buy now!

A welcome pack worth 6200 USDT for new users! Sign up now!

Are Penny Stocks on Nasdaq?

Are penny stocks on nasdaq? Many investors ask this question when they see low-priced stocks trading on national exchanges or over-the-counter venues. This article gives a clear, beginner-friendly answer and a practical playbook: how to identify Nasdaq-listed penny stocks, how they differ from OTC penny stocks, the regulatory framework that applies, and steps to reduce avoidable risks. Read on to learn how to screen for exchange-listed low-priced stocks, where to confirm disclosure and compliance, and which authoritative sources to consult.

Definition of “Penny Stock”

The term "penny stock" has different uses in markets and regulation. Historically it meant shares trading for less than $1. Today, many market participants and regulators use a broader SEC-focused threshold.

SEC-related definition: The SEC and many broker-dealers treat a penny stock as any equity trading below $5 per share. This definition matters for broker-dealer obligations and disclosure rules.
Older/retail usage: Some traders still call sub-$1 listings penny stocks based on historical usage.
Variability: Definitions can differ by regulator, exchange, and broker-dealer—so always check the rule or policy that applies to your account or jurisdiction.

Key characteristics of penny stocks (however defined):

Low price per share: A small nominal price that can mask the company’s actual market value.
Small companies: Often lower market capitalizations and smaller operations, though exceptions exist.
Low liquidity: Fewer shares traded daily, wider bid-ask spreads, and greater slippage risk.
High volatility: Price moves can be large in percentage terms on relatively small share-volume changes.

Penny Stocks and Major Exchanges

Many people assume penny stocks only trade over the counter, but penny stocks can and do appear on major exchanges like Nasdaq when the issuers meet listing and ongoing standards. The practical difference between exchange-listed penny stocks and OTC penny stocks is primarily one of disclosure and oversight:

Exchange-listed penny stocks: Listed companies that trade on Nasdaq have met initial listing criteria and must satisfy ongoing disclosure and reporting obligations under exchange rules and federal securities laws. They are subject to more continuous oversight, standardized trading infrastructure, and reporting regimes.
OTC penny stocks: Securities trading on OTC markets (including the Pink Sheets or OTCQB/OTCQX tiers) often have lower listing standards and can include firms with more limited public financial disclosure, increasing information risk and potential for fraud or manipulation.

Investors should therefore consider venue (Nasdaq vs OTC) as an important factor in assessing transparency and operational risk.

Nasdaq market tiers and where penny stocks appear

Nasdaq organizes listed equities into market tiers with different listing standards. The three primary tiers are:

Nasdaq Global Select Market: Highest standards for financial strength, liquidity, and governance.
Nasdaq Global Market: Mid-level listing standards for established companies.
Nasdaq Capital Market: Designed for smaller companies and has lower initial thresholds; penny stocks are most commonly found here.

Penny stocks are most likely to appear on the Nasdaq Capital Market because its financial and corporate governance thresholds are lower than the Global tiers. That said, listing on Nasdaq—any tier—still requires meeting initial listing criteria and continuing obligations such as periodic reports, minimum bid price, and minimum market value or shareholder equity for continued listing.

Listing and continued-listing requirements relevant to low-priced stocks

Nasdaq’s listing and continued-listing rules include criteria that directly affect low-priced companies. Key points to watch:

Minimum bid price: Nasdaq enforces a minimum bid-price requirement (commonly $1.00) for continued listing. Companies trading below the minimum may receive a compliance notice and a cure period to regain compliance.
Market value / public float: Listings typically require minimum market value of publicly held shares or minimum aggregate market value thresholds that smaller firms must meet.
Financial condition: Some tiers require minimum stockholder equity, net income, or operating revenue tests.
Reporting and disclosure: Companies must file timely periodic reports (Forms 10-Q, 10-K) and adhere to Nasdaq corporate governance listing standards.

If a company fails to meet standards, Nasdaq can issue deficiency notices, grant limited cure periods (for example, a 180-calendar-day compliance window for minimum bid price), and ultimately suspend or delist a security. Some firms use reverse stock splits to raise per-share price to meet the $1.00 minimum; exchanges monitor repeated reverse splits and may take additional action if such maneuvers appear to avoid legitimate compliance.

SEC Rules and the “Penny Stock” Regulatory Framework

The SEC provides definitions and broker obligations that affect how penny stocks are handled in retail accounts. Important elements include:

SEC Rule 3a51-1: This rule helps define what constitutes a penny stock for purposes of certain regulatory provisions. It sets out categories like publicly traded shares priced below a specified amount and applies in some contexts to OTC securities.
Broker-dealer obligations (Penny Stock Rules): When a security is designated a penny stock under applicable rules, broker-dealers must meet additional requirements before recommending or executing transactions for retail customers. These obligations often include:
- Delivering a standardized risk disclosure document to the customer.
- Obtaining a written acknowledgment of receipt of the disclosure.
- Making reasonable efforts to obtain current bid and ask quotations.
- Providing account statements that disclose market quotations.
- Performing suitability checks and ensuring the transaction is appropriate for the customer’s financial profile.

Brokers and exchanges use SEC definitions and internal policies to determine which securities receive penny-stock treatment. These rules aim to increase transparency and protect retail investors from high-risk trades in low-priced equities.

Nasdaq’s Official Penny Stock List

Nasdaq publishes a daily "Penny Stock List" that identifies companies on the Nasdaq Capital Market that are believed to meet the SEC’s penny stock criteria or otherwise require penny-stock treatment. The list serves several functions:

Compliance aid: Brokers and dealers use the list to help satisfy their compliance and disclosure duties under the Penny Stock Rules.
Investor awareness: The list signals to market participants which Nasdaq-listed securities may be subject to special broker requirements and heightened risk.

How companies are added or removed:

Added when market data and filings suggest they meet penny-stock thresholds.
Removed when a company no longer meets criteria (for example, if the share price rises above $5 or the company’s public float/market-value metrics change) or upon review by Nasdaq.

Investors should treat the Nasdaq Penny Stock List as a dynamic tool—companies can move on and off the list as market conditions and filings change.

Identifying and Screening Nasdaq Penny Stocks

Practical screening criteria for investors and researchers:

Price threshold: Many screeners use a default filter of under $5 per share to align with SEC-oriented penny-stock treatment; some traders use under $1 for historical definitions.
Volume / liquidity: Average daily volume and recent trading volume indicate liquidity; low volume increases execution risk.
Market capitalization: Small-cap or micro-cap filters help isolate smaller issuers more likely to exhibit penny-stock characteristics.
Public float: A small public float can increase price volatility.
Exchange listing: Filter for Nasdaq-listed securities vs OTC.

Common tools and data sources:

Exchange lists: Nasdaq’s own Penny Stock List and daily market summaries.
Financial screeners: Major screeners (for example, Yahoo Finance, StockAnalysis) allow filters for exchange, price, volume, and market cap.
Dedicated penny-stock services: Industry-specific services that track low-priced securities and promotional activity.

Cautions when screening:

Stale data: Many free screeners refresh at different cadences. For penny stocks, live quotes matter—delayed data can mislead price or bid/ask dynamics.
Promotional bias: Some lists and services focus on promoted tickers; cross-check with official filings and Nasdaq/SEC sources.

Practical tip: combine exchange-sourced lists (Nasdaq’s Penny Stock List) with live market data and SEC EDGAR filings for verification before executing trades or forming opinions.

Differences: Nasdaq-listed penny stocks vs OTC/“Pink Sheets” penny stocks

Comparing exchange-listed penny stocks to OTC penny stocks highlights important trade-offs:

Disclosure and reporting:
- Nasdaq-listed: Required to file regular SEC reports (10-Q, 10-K) and meet exchange corporate governance requirements.
- OTC: Many OTC issuers have fewer or less-frequent filings; some OTC tiers require no audited financial statements.
Oversight and surveillance:
- Nasdaq-listed securities are subject to exchange surveillance and market-wide rules designed to reduce manipulation.
- OTC markets have surveillance, but oversight and enforcement resources can be more limited.
Liquidity and infrastructure:
- Nasdaq offers centralized order books, market makers, and standardized trade execution.
- OTC trading can be fragmented, with wider spreads and greater execution uncertainty.

Implication: Nasdaq-listed penny stocks generally offer higher transparency and potentially better execution mechanics than OTC penny stocks, but lower price does not remove fundamental and market risks.

Risks and Investor Considerations

Low-priced stocks carry specific risks that affect both Nasdaq and OTC listings:

Low liquidity: Wide bid-ask spreads and slippage risk when entering/exiting positions.
Volatility: Sharp price swings are common, which can magnify losses or gains.
Limited disclosure (for some issuers): Even exchange-listed micro-caps can have thin or outdated analyst coverage and limited public information.
Fraud and manipulation: Smaller-cap and low-price securities are vulnerable to pump-and-dump schemes and other market abuse, especially off-exchange.

Investor precautions:

Due diligence: Read SEC filings (10-K, 10-Q, 8-K) and analyst or trusted research where available.
Check exchange status: Confirm the company’s listing tier and any Nasdaq deficiency or delisting notices.
Use stop-loss orders and position size limits to protect capital.
Avoid trading based solely on promotions or tips; verify with filings.
Consider professional advice if unsure about the risks.

These measures reduce—but do not eliminate—the pronounced risks that can accompany penny stocks.

Broker-Dealer Requirements and Retail Investor Protections

When a security meets penny-stock treatment, broker-dealers must follow additional safeguards for retail customers. Typical obligations include:

Delivery of a standardized risk disclosure statement explaining penny-stock risks.
Written acknowledgment that the customer received the disclosure before transacting.
Reasonable efforts by the broker to obtain current bid and ask quotations and to disclose those quotations.
Suitability checks to confirm the trade is appropriate given the customer’s financial profile and experience.

These protections aim to reduce retail investor harm by ensuring awareness and limiting unsuitable sales. Even with these rules, investors must remain vigilant and confirm disclosures and account documentation.

Nasdaq Delisting Policies and Recent/Proposed Changes

Nasdaq enforces delisting procedures for securities that fail to meet listing standards. Key elements include:

Minimum price threshold: Companies that trade below the minimum bid price (often $1.00) for a specified period receive a deficiency notice.
Compliance periods: Nasdaq typically offers a cure period (for example, 180 calendar days) for the issuer to regain compliance. If compliance is not met, delisting proceedings may follow.
Reverse stock splits: Companies often perform reverse splits to raise per-share price; exchanges monitor repeated reverses, and regulators may scrutinize such actions.

Recent and proposed changes (trends to watch):

Tighter delisting enforcement: Exchanges have signaled stricter enforcement of minimum-price requirements and corporate governance standards to protect investors.
Restrictions on repeated reverse splits: Some rule updates target the use of repeated reverse splits to artificially maintain listing status without meaningful improvement in company fundamentals.

These policy trends aim to improve market quality, reduce abusive tactics, and raise the bar for continued listing—especially for micro-cap issuers.

Practical Steps for Investors Considering Nasdaq Penny Stocks

Actionable checklist:

Confirm the listing: Use Nasdaq’s site or market data sources to verify the security is Nasdaq-listed and identify its market tier.
Review SEC filings on EDGAR: Read the latest 10-Q, 10-K, 8-K and any auditor communications.
Check Nasdaq’s Penny Stock List: See whether the company is flagged for penny-stock treatment.
Use high-quality screeners: Filter by exchange (Nasdaq), price (for example, under $5), minimum average daily volume, and market cap.
Understand liquidity: Examine average daily share volume and the size of visible bids/asks.
Avoid promotions: Do not rely on marketing messages or social-media hype; verify all claims with filings.
Manage risk: Use appropriate position sizing, stop-loss strategies, and be prepared for wide spreads and rapid moves.
Consider alternatives: If uncertain, consider gaining exposure through better-known, higher-liquidity names or diversified instruments listed on major venues.

These steps help ensure your analysis covers disclosure, liquidity, and regulatory status.

Examples and Changing Constituents

The set of Nasdaq-listed companies trading below common penny-stock thresholds changes frequently with market moves, corporate actions, and news. Examples that illustrate transitions across categories include firms that historically traded as penny stocks but later rose above common thresholds.

As of January 15, 2026, according to Benzinga, several defense and aerospace names were in focus for market participants, with wide price moves and varied market caps. Examples cited included: Kratos Defense and Security Solutions (KTOS), RTX, L3Harris (LHX), General Dynamics (GD), and Northrop Grumman (NOC). Some of these firms moved out of penny-stock status as revenues and valuations grew; others may briefly trade at lower price levels depending on market action.

Because constituents change daily, live screening is essential: use Nasdaq lists, up-to-date market feeds, and EDGAR filings rather than static lists.

Frequently Asked Questions (FAQ)

Q: Can a Nasdaq-listed company be a penny stock? A: Yes. A Nasdaq-listed company can meet commonly used penny-stock thresholds (for example, trading under $5) and be treated as a penny stock for regulatory and broker-dealer purposes.

Q: Are Nasdaq penny stocks safer than OTC penny stocks? A: Generally, Nasdaq-listed penny stocks have higher disclosure requirements and exchange oversight than OTC penny stocks, which may offer greater transparency and more robust trading infrastructure. Safety is relative; low price alone does not eliminate other risks.

Q: What happens if a Nasdaq stock falls below the minimum price? A: Nasdaq may issue a deficiency notice and provide a compliance period (commonly 180 days) for the issuer to regain the minimum bid price or otherwise meet listing standards. Failure to regain compliance can lead to delisting proceedings.

Q: Where can I find a live list of Nasdaq penny stocks? A: Check Nasdaq’s Penny Stock List and reputable screeners that support live pricing and Nasdaq filters. Always confirm with SEC filings and live market data.

References

Nasdaq listing rules and the Nasdaq Penny Stock List (official exchange materials).
U.S. Securities and Exchange Commission (SEC) Rule 3a51-1 and broker-dealer penny-stock guidance.
EDGAR filings (Forms 10-Q, 10-K, 8-K) for company-specific disclosures.
Financial screeners and market-data services for live quotes, average volume, and market-cap data.
As of January 15, 2026, Benzinga reported recent volatility and active trading in several defense and aerospace names; this example illustrates how listed companies can move between price categories.

Editors: Insert explicit citations to Nasdaq pages, SEC rule text, and EDGAR filing references when finalizing for publication. Real-time ticker examples should be sourced from live market data.

Want to explore trading and research tools? Check Bitget for market data, advanced screeners, and Bitget Wallet for secure self-custody. Always verify listings and filings, and consult a licensed professional if you need personalized advice.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.