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Komu

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  1. For small companies, pink sheets create an opportunity to get access and raise capital by selling their shares to the public. Because of the lack of a stock historical backing or a reliable financial track record, these small companies are often forced to sell their stock at considerably low prices. 

     

    The low share prices make it possible for more investors to afford the company’s shares. Additionally, pink sheet transaction costs are low since the listing fees of the large exchanges are not charged. 

     

    Pink sheets generally come with both advantages and disadvantages (the pros and cons respectively). 

    Pros

    1. The first advantage of pink shits is the benefit of access to capital for small companies. The pink sheet listings create an opportunity for small companies to raise funding through public stock sales.
    2. Even though the pink sheet listing comes with significantly low stock prices, they create room for a significant increase in share prices when the company finally becomes successful. 
    3. The companies do not have to pay expensive exchange listing fees to like is the norm with popular stock exchanges like NASDAQ and New York Stock Exchange. This translates to slightly lower trading transaction costs as well. 

     

    Cons

    Some of the disadvantages or cons of Pink sheet listing and trading include:

     

    1. Investors are at an increased risk of fraud and manipulation because pink sheet listing has fewer regulations and requirements, which sometimes become avenues exploited to give outdated and wrong information to investors leading to significant losses. 
    2. Pink sheet stock listings are thinly traded therefore, they are very challenging to the majority of investors who would want to freely and conveniently buy and or sell shares.
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