Five years since pandemic crash: Penny stockholders celebrate, but for how long?

Subscribe to enjoy similar stories. The covid-led stock market crash in March 2020 birthed a spectacular four-year bull run. Five years on, the boom phase and the subsequent, ongoing correction have brought significant lessons for investors—especially new entrants.

While most have moderated return expectations by now, some have exited the market altogether, and others are holding tight in the face of recent corrections. But even in this grim backdrop, headlines are often peppered with penny stock multi-bagger success stories, indicating an unsatiable appetite for these stocks. The allure of humungous returns on minimal investment has driven many investors towards penny stocks—microcap companies with dirt-cheap share prices.

Since these stocks are priced low, even a small increase in their value can result in a significant percentage gain in invested capital, and the pandemic bull run offered them the perfect opportunity to become ‘multi-baggers’. A Mint analysis of penny stock behaviour during the last four major market cycles in 20 years reveals that in the latest bull run of 2020 to 2024, around 90% of stocks in the penny universe offered more than 100% returns, i.e. more than doubled, or turned ‘multi-baggers’.

Stocks priced at ₹1-15 were defined as penny stocks in the analysis. This stellar performance is second only to the one they put up during the 2003-2008 bull run when 97% of them turned multi-baggers. During both the bull runs, close to 90% of these stocks crossed the penny stock threshold by the end of the bull phase.