Posted 2/3/2024, 1:31:00 PM
SPAC Bubble Burst Drives Surge in Risky Penny Stocks
- The collapse of the SPAC bubble has led to a surge in penny stocks, with 557 now trading below $1
- Many of these were former SPACs that went public but then saw their share prices crash
- The ultra-low share price makes it easier to achieve high trading volumes, creating market inefficiencies
- High volumes falsely attract retail investors, even though penny stocks are very risky
- Companies are doing reverse stock splits to boost their share price above $1 to avoid being delisted