What does it mean if a stock's bid is zero. Does this mean there are no buyers?

Question

Hi,

I just started my entry into investing world and was going through articles about investing. I understood the notion that bid indicates the current highest offer price from any buyer (limit order) and ask indicates the lowest selling price from any seller

If the above assumption is correct, then what does it mean if a given stock's bid = 0.0. Does this mean no buyers. Strangely, the ask for the same stock is higher than the market price. Does this mean there are sellers without buyers? Whom are they selling to?

Ex: Company A
market = 0.39; bid = 0.0; ask = 0.50;

If I buy A's stock, will I be able to sell quickly. The spread seems to be large. Is this a candidate for short term investment? (of course assuming that the company is doing good)

Appreciate your response and clarification on this.

Thanks
-TP

Answer 1

That's great that you are getting started investing. Investing is great but be cautious to understand exactly how everything works. I HIGHLY reccomend reading "Beating the Street" by Peter Lynch and talking to as many SOPHISTICATED investors as you can as you are getting started. You may want to look at meeting with some Venture Capitalist groups or Angel investors to see how they invest. It is important to understand not just the company but the business structures and practices that make a company solid as well as the practices that immediately raise a red flag. You want to learn as much as you can about all the different kinds of investments that are available so you can see which strategies and levels of risk you are comfortable with. The market is doing very well right now, however a companys performance isn't always a direct indication of the performance of the stock. The market is largely influenced by investor confidence, political situations, FEAR, and many other emotional responces.

Company A sounds like a company that went public too early and is trying to drive up their price like penny stocks do. Penny stocks come out with millions of shares to raise a very small amount of moneyand have the loosest floats (Float is the term for the amount of shares outstanding compared to the total amount of shares) you have ever seen for a very diluted company value and volitile share price. This doesn't make for a solid company. I would take a very close look at their management and their experience in bringing a company public.

I would suggest first dealing with a broker who deals with this type of investment and invests themselves. (one that does not charge up front) While learning from a professional you should work on analyzing investments and reading "Beating the Street" by Peter Lynch as well as the Rich Dad Poor Dad Books by Robert Kiyosaki. Highly educate yourself first before investing on your own especially if you don't have money to loose but if you learn from some SOPHISTICATED INVESTORS you can find yourself very successful and avoid some costly mistakes.

I hope this helps you,
Derrick

Answer 2

Hey,
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Have a nice day

Answer 3

There are currently no bids for this stock, and the "spread" is huge ($.50 between bid and asked). You can buy at the asked price, but when you go to sell, guess what, there will be no one there to sell to! And there will still be stock ahead of you waiting to be sold at the offer price.

There are no bids for a reason. You should find out what that reason is. Whatever it is, it isn't good for the buyer.

No, this is not a good candidate for a short term (or long term, for that matter) investment. Stick to stocks listed on a major exchange or NASDAQ.

Stocks selling for less than a couple of dollars per share are called penny stocks and are there to make money only for the seller. Stay away from anything like this.

Answer 4

In your example Market = .39 is most likely the last price the stock traded at. A bid price of zero (also referred to as "bid wanted") generally indicates that there are no buyers, but you can often get a bid on the stock by calling around to varios broker dealers (you'd have to have your broker do this for you). As for the offer being higher than the last, or market as your quote software seems to call it - this is not unusual at all, stocks trade between the spread all the time.

This is not a good candiate for ANY investor, long or short term. There is a reason its trading at 39 cents, and its not becuase the company is doing good.

Answer 5

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Answer 6

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Answer 7

The bid = 0 means no one is wanting to buy it.
They may lodge bids when market opens, but the gap there is very wide. Would normally look at the volume and trades over past three months.