Key Highlights
- Retail investors are also drawn by the possibility of multibagger returns in a short period, as even a small price movement in penny stocks can translate into large percentage gains.
- However, these stocks come with significant risks.
- Penny stocks typically suffer from high volatility, low trading volumes, weak fundamentals, and limited corporate disclosure.
- Price movements are often driven more by speculation than by business performance, making them vulnerable to sharp corrections and manipulation.
- Liquidity constraints can also make it difficult for investors to exit positions during market downturns.
