Although defining a penny stock OTC may seem simple, it can actually be quite difficult. First, we must look at what a penny stock actually is. At its core, a penny stock is any stock that costs less than five dollars per share. A stock may be this inexpensive because it belongs to a new company that has yet to make a name for itself or because it represents an untested product. In some cases, inexpensive stocks have dropped from a much higher price.