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A "penny stock" has different meanings, but generally a stock is considered to be a penny stock if its share price is below $5 a share. A company can do several things to avoid this classification: 1. Do a reverse split. The company decreases its share count by a factor that increases the share price by this same multiple. This is the opposite of the more commonly known forward stock split. 2. Focus on positive cash flow. Inevitably a stock price will increase if a company can consistently bring in cash and increase the overall assets of the company. 3. Enter new markets - introduce new products - make deals - promote investment awareness. There are numerous other inventive ways a company can hope to persuade investors to purchase the stock. Investing is more art than science; the market will decide the value of a company based on expectations of future profits.

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Q: A stock trades for 1.25 per share What might that company actually do in order to avoid being classified as a penny stock?
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