I was looking at Helios and Matheson Analytics Inc OTCMKTS: HMNY (parent of MoviePass) and noticed they are trading for 0.0032 USD. I understand how this can happen as the market cap falls below 1/100th of the shares outstanding but how do you actually transact when the prices are like this? I cannot buy/sell a single share? What happens if I own one share, I sell, and then want to cash out?
Sometimes, we own things that are all but worthless.
What do you do if you have a single staple you want to get rid of? Nobody would give you even a penny for it. Even if it's unbent, a single staple is only worth a tiny fraction of a penny. If it's been used, its value as scrap metal is even less.
But if you have a million of them, you can open an office supply store and sell them in blocks of a thousand and make some cash.
I cannot buy/sell a single share?
Sure you can. I'm sure someone would sell you theirs for $0.01, 3x the market value. Selling would obviously be tricky
What happens if I own one share, I sell, and then want to cash out?
You need to find someone who enjoys losing money. Or buy more then sell the new total.
Sometimes investments become worthless. Some brokers charge a fee to remove worthless things from your account.
I understand how this can happen as the market cap falls below the shares outstanding
Technically, the market cap would have to fall below 1/100th of the shares outstanding in order for share price to drop below one cent
...but how do you actually transact when the prices are like this? I cannot buy/sell a single share? What happens if I own one share, I sell, and then want to cash out?
You can buy or sell any number of shares that you like at the current bid/ask, in the size available at those prices. The transaction would be rounded up to the nearest penny. If you want to buy 1 share for $0.0032 and pay one cent for it then go for it. However, I suspect that your broker is likely to have some issues with this, assuming that they already don't prohibit one share transactions in the sub penny market.
I had a situation where one stock dropped over 99% in value. The company where my account was, had rules that allowed sales of sub-penny stocks in 2 manners: blocks of 100 or "all of it". My account was credited for the 94 cents that the 100 shares sold for, and I was not charged the $7.95 fee for stock trades (in that type of retirement account).
I don't fully remember their rules for purchasing such stock, but I believe that the minimum to buy was "enough to get to $1" plus the $7.95 transaction fee.
It's pretty unusual to buy single shares of stocks. Stocks are usually sold in blocks called round lots, which are 100 shares in most US stock exchanges. So even if the share price is a fraction of a cent, when you purchase 100's of them you will pay more than a penny.
Dividend reinvestment programs allow you to purchase odd lots of shares. But I don't think these are purchased on the open market, they come from shares that the company owns for this purpose; the same goes for shares that are given to employees as a form of compensation.
This is also the reason why companies tend to split shares when their stock price gets too high. They want investors to be able afford to 100 shares, so they spli shares to make this affordable to average investors. A handful of companies don't do this. Berkshire Hathaway is the most notable, its share price is over $300,000, and Warren Buffett says he keeps the price high to deter short-term traders from creating volatility.