Reaching $2.45 after a recent trading day, shares of Moleculin Biotech, Inc. (:MBRX) have been making headlines in the micro cap world as the price moved 2.12%.
How the stock has been performing recently? Over the past twelve months, Moleculin Biotech, Inc. (:MBRX)‘s stock was 5.26%. Over the last week of the month, it was -8.05%, 130.77% over the last quarter, and 80.45% for the past six months.
Over the past 50 days, Moleculin Biotech, Inc. stock was -27.91% off of the high and 66.73% removed from the low. Their 52-Week High and Low are noted here. -61.34% (High), 246.97%, (Low).
A concern for investors regarding penny stocks is the lack of reporting standards for companies whose stocks trade in the Pink Sheets or on OTCBB. Though OTCBB does require that registered companies stay current with SEC filings, those filings are the bare minimum and below what an exchange-traded company would have to file.
Unfortunately, since companies that are delinquent in submitting their filings to the SEC are still accessible to individual investors, penny stocks can be a treasure trove for dishonest people, which is one of the reasons that the SEC has taken an active role in making sure that the public is protected from dishonest individuals and companies in the penny stock arena. To even sell you a penny stock, brokers are legally required to send out documents outlining the risks of penny stock trading.
The three things that investors will want to look for when picking a penny stock are the underlying business, the financials, and the footnotes.
A company’s underlying business is even more important than it is in exchange-traded stocks because the penny stock world is home to shell companies that are legally incorporated, but lack any business operations. Investors should look for companies with real, sustainable business operations when considering penny stocks.
As with any stock, any given penny stock’s financials are essential for investors. With penny stocks, however, the question is really more about the quality of the financials. If an investor can answer “yes” to the following questions: Do the financials look healthy? Does the company file on time? Who was the auditing firm? Then it’s time to browse the footnotes.
Footnotes are an oft-overlooked part of a company’s filings, yet prove to be extremely important. While it’s possible to get by without reading a large company’s footnotes, if an investor misses the footnotes for a penny stock, it could be damaging. Penny stocks are small companies and, as such, are more prone to things such as related-party transactions and non-GAAP accounting oddities, so the footnotes for penny stock companies should not be overlooked.
Penny stocks are risky and fodder for scammers. Penny stocks can also make you a lot of money. Many investors find that the potential windfalls for penny stocks are worth the inherent risks involved. Penny stocks can deliver an impressive return.
Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.