Stocks

Evaluating Penny Stock Press Releases

For any penny stock concerned with its stock price, they will want to bring exposure to their company. One way to do that is through the use of press releases. A company can send out its own press releases or hire an Investor Relations Firm to handle its communication.

With any communication provided to you as an investor, you should always think about why the information is being shared with you. If you find a company or IR firm is issuing excessive press releases, it may be because they are focused on the short term. Instead of spending time building up relationships with current and potential investors, the company could be rushing information out on purpose.

By sending out a small but steady number of one or two per month, a company is seen as more reliable to the investor public. There is only so much genuine good news for any company on a monthly basis, even the most exciting and innovative ones. A company sending out too many press releases is simply fluff and does not provide any real value to investors. Investors may even begin to ignore the releases, which doesn't help the company … or the investors.

A lack of press releases is just as dangerous as an excessive amount of press releases. Investors need to be informed about important developments and upcoming information or they could draw the conclusion that nothing is going on with the company. Investors need continued validation that they made a good decision. In the penny stock world where information is sometimes hard to come by, all it takes to put downward pressure on a stock is a company that doesn't release or communicate information.

Just as important as making sure that the best penny stocks you want to invest in sends out press releases, you want to make sure that the press releases are not to frequent or tardy. Consistency is key to having long term shareholder support and success.

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