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What is Over-The-Counter (OTC)?
By Robinhood Learn-June 18, 2020
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Understanding OTC

Over-the-counter (OTC) refers to how stocks are traded when they are not listed on a formal exchange. Such trades might happen directly with the company owners, or might be done through a broker. In the United States, listed companies are bought and sold on the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotation (NASDAQ). Companies not listed on the NYSE or NASDAQ can sell equity in their business over-the-counter. Other financial securities traded outside an exchange are also considered OTC — such as bonds, derivatives, currencies, and other complex instruments.

EXAMPLE

Facebook has been around since 2004. It spent its early years growing into what is now a technology giant. In 2012, the company decided to go public and sell shares of the company via the NASDAQ exchange. Although the initial public offering (IPO) didn’t happen until eight years after the company launched, that doesn’t mean you couldn’t own a piece of the company before then. If you wanted to buy into the fledgling company back in 2007, you would have needed to do it over-the-counter (OTC).

This OTC Stock Is Bigger Than Facebook-Excerpt
By StreetAuthority Networ-kSeptember 7, 2016
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Normally when investors think of stocks trading on the over-the-counter exchange, it's only after reading the headline on some penny stock scam. Most OTC-traded companies are thinly-traded and offer very limited financial information available to shareholders.

For this reason, most OTC stocks are not normally covered by analysts, and are usually completely ignored by regular investors.

That can mean outsized gains for investors that are willing to dig deeper into financials to uncover the companies that are more than just a postal address for a pump-and-dump scheme.

Screening through OTC stocks recently, I found one company that could be the furthest from what you would normally expect on the market. It's building a consumer internet empire, and is already the largest company in Asia.

In fact, it's bigger than Facebook (Nasdaq: FB).

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