1. Supply And Demand – One of the top factors that affect penny stock prices is the supply and demand of the specific stock being traded. If there is more supply than demand the stock will usually decrease in price due to this fact, and if there are more buyers than sellers the price will go up.
2. Earnings Report Release – The price of all stocks will fluctuate more when it is time for the company to release the earnings report. This report must be released by every company every three months if the company is listed. If the company has expectations of a strong report and earnings then the stock price will usually go up and a weak earnings expectation can lower the price of the stock.
3. Potential Merger or Takeover Activity and Rumors – If a merger or company takeover is suspected or announced then this factor will affect the stock value and cause the price to fluctuate. A suspected merger or other activity can cause the price of the penny stock to go either way.
4. News That Relates To The Underlying Company Value – Any news that relates to the underlying company value or risk will affect the penny stock prices for the company. News which is favorable to the company will typically cause prices to rise and news that is unfavorable will lower the stock price.
5. News Concerning Company Competitors – News which concerns the main competitors of a company will also affect the price of the company stock. If a competitor gains a patent or approval for a competing product then the price of the company stock will usually slide while the competing stock will go up.
6. Unemployment Data – Unemployment is one of the key economic indicators that will affect the price of all stocks, whether the stock is a penny choice or a large cap company. High unemployment generally tends to bring the entire stock market down while low unemployment numbers boost the market and individual stock prices.
7. Consumer Confidence – One factor that affects penny stock prices is consumer confidence. When investors are confident about the current economic situation they are more likely to buy stocks and this affects the supply and demand equation. If consumers are fearful of the economic situation then they tend to hold on to investment capital instead of buying stocks.
8. Global Events – Events around the world can affect the price of any stock. A civil war in Mogadishu or political unrest in the Middle East can cause the entire global economy to shift, and many stock prices will fluctuate as a result as well.
9. Release of The Gross Domestic Product Figures – The GDP plays a large role in stock prices and market activity. If the gross domestic project figures are weak or suggest economic uncertainty then the market and individual stock prices may decrease significantly.
10. Investment Scams – Investment scams are a top factor that affects penny stock prices. One of the most common scams is called the Pump and Dump, and this involves unscrupulous traders who create rumor to get investors in and artificially inflate the value of the stock. Once the price is inflated the investor will dump the stock and flood the market which causes the price to drop.