What happens to a company when the stock becomes worthless?

For example, if you buy into a penny stock at $0.04 and then the companies stock decreases to 0.03 then 0.02, 0.01 and eventually 0.00. When a stock becomes valued at $0.00 what happens to the company? What happens to the investor?|||You've got that backwards, the company became worthless hence the stock becomes worthless not the other way around. Nothing happens to the investor, he just winds up owning shares in a worthless company, mind you the reason why they're trading for pennies is that the possibility that they might make it big multiplied by the probability that they might make it big results in mere pennies if you're lucky in value.



Note that penny stocks are difficult to trade in because of liquidity issues, the possibility of price manipulations, the fact that these companies are either barely starting up or on their way out, they're too small for most numerical indicators to have any meaning and the difficulty in researching relatively unknown companies. If you're asking something as basic as what happens when the stock becomes worthless, you really shouldn't be thinking of penny stocks.|||The simple mechanics of this are as follows:





1) Phone your broker, let them know you are holding a stock which has no market available. This only applies if you held a stock on a regulated exchange (IE Nasdaq), the company ceased operations and have stated as much publicly. Pink Sheets for example, generally always have a market.





2) Your broker will send you a "security disposition form" or something along those lines. In essence this form states that there is no market remaining in said security and/or there is a cease trading order in effect which prohibits your sale of said securities.





3) You must willingly gift said security to your brokerage and allow them to dispose of it by any means necessary.





4) Remember that any tax implications following said disposition are your responsibility.





Hope this helps|||Penny stocks are a waste of time to fool with. No serious investor messes with them. You want stocks with a min. value of AT LEAST $25. No one ever made good money with penny stocks. I suspect most of them are either scams or wannabes.|||Usually it's the company becoming worthless that CAUSES the stock to become worthless - not the other way around. As for the investor, he loses his investment.