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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?

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    My question would be, "Who owns a single share of HMNY?"
    – RonJohn
    Oct 10, 2019 at 18:37
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    "market cap falls below the shares outstanding" you have the cause/effect wrong. The market cap is just the price times the number of shares, so it is based on the price, not the other way around.
    – D Stanley
    Oct 10, 2019 at 18:54
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    That's not the issue. The way it's worded, the price is a function of the market cap, when in reality it's the opposite. It's not crucial to your question, though.
    – D Stanley
    Oct 10, 2019 at 19:08
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    "No one with more than half a brain will buy a stock in that condition." And yet, over 19 million shares traded yesterday :->)
    – Bob Baerker
    Oct 11, 2019 at 12:37
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    Another way to look at it is like a currency exchange. The South Korean Won is currently worth $0.00084 USD. How would you exchange 1 Won? You wouldn't. The currency exchanger would require you to exchange enough Won to make at least one unit of the target currency. Stocks are kind of the same way.
    – bta
    Oct 11, 2019 at 17:48

5 Answers 5

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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.

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    As an example, I still technically own a few shares of Lehman Bros.
    – ceejayoz
    Oct 11, 2019 at 13:41
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    "that are all but worthless" -- did you mean "that are nothing but worthless"? The way it currently reads, it appears to say they're not worthless, as in "they're many things, except worthless". However, the following text implies you meant they are worthless.
    – JoL
    Oct 11, 2019 at 21:27
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    @JoL "all but" means "very nearly". They are very nearly worthless, but not quite (e.g. in quantity they have value). grammarist.com/usage/all-but
    – MikeH
    Oct 11, 2019 at 21:30
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    Global domination starts with a single paperclip: decisionproblem.com/paperclips/index2.html (although the first one is here sold at >= $0.01).
    – mimo
    Oct 13, 2019 at 16:31
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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.

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    Actually selling would be easy. When it's settled, the buyer would pay you $0.00.
    – Robin Salih
    Oct 11, 2019 at 10:02
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    Selling is not easy, that's why this question is being asked. The reason the share price is at $0.003 per share is a lack of buy demand.
    – quid
    Oct 11, 2019 at 23:09
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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.

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  • You're right, it would have to fall 1/100th. My mistake.
    – Nico
    Oct 10, 2019 at 18:45
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    The nearest penny would be $0.00?
    – Dannie
    Oct 11, 2019 at 10:06
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    @Dannie Bankers' rounding.
    – ArtOfCode
    Oct 11, 2019 at 12:06
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    @ArtOfCode that still goes to 0.00. Banker's rounding or round to even just means that in case of a number ending in 5, the nearest even integer is preferred. I.e. 1.5 rounds to 2, but 0.5 rounds to 0 (as opposed to 1 with the common commercial rounding / round away from zero )
    – Chieron
    Oct 11, 2019 at 14:09
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    @ArtOfCode The round up in their favor. But that is how banks round, not the specific rounding type called banker's rounding.
    – Chieron
    Oct 11, 2019 at 16:50
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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.

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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.

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  • Shares for dividend reinvestment programs may be bought on market. Some companies (or their broker) explicitly acquire the number of shares needed to meet requirements of the dividend reinvestment program on market and then distribute them among all investors participating in the reinvestment program i.e. they don't buy separate parcels of shares for every investor, or allocate them from some special pool owned by the company. Some companies simply issue new shares.
    – Peter
    Oct 13, 2019 at 3:07
  • @Peter But since they're buying them for all the DRP participants at once, they can still buy round lots, and then dole them out to all the participants. My point was that the participant receives odd lots through the plan, but this isn't affected by the normal market rules.
    – Barmar
    Oct 13, 2019 at 19:23

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