Penny Stock Liquidity

When a company share doesn’t have (much) liquidity, two problems occur:-

Firstly, there is always the possibility that having bought the stock, there simply isn’t anyone who wants to buy it off you. If liquidity is low, and you can’t find a buyer, then clearly the classic market rule of supply and demand will apply - and you’ll have t drip the price until finally someone does find it attractive enough to take a punt.

Secondly, low liquidity will always provide the opportunity for some traders to manipulate the stock price - the easiest plan here is to buy large amounts of stock, hype it by various - nowadays internet-based - methods and then sell after other investors have been suckered into a relatively meaningless deal (aka pump and dump).