Pink sheet stocks are securities traded on over-the-counter (OTC) exchanges such as OTC Markets. These firms are not listed on major exchanges and are not subject to the same financial reporting requirements as publicly traded companies on major exchanges. Companies that are publicly traded must file with the Securities and Exchange Commission. Pink sheet stocks may be young or small, or they may simply refuse to file the financial reports required by other exchanges. They are traded in person and are now compiled electronically.

Pink sheet stocks refer to securities that are not listed on major stock exchanges such as the New York Stock Exchange (NYSE) or NASDAQ. Instead, they are traded on over-the-counter (OTC) markets, specifically the OTC Pink marketplace. The term "pink sheets" originated from the color of the paper on which quotes for these stocks were historically printed.

Companies with pink sheet stocks typically do not meet the stringent listing requirements of major exchanges, making them riskier and less regulated investments. These stocks often belong to smaller companies, start-ups, or those with financial challenges. Investors in pink sheet stocks may encounter lower liquidity, wider bid-ask spreads, and limited financial information, as these companies are not subject to the same reporting standards as those listed on major exchanges.

Pink sheet stocks are categorized based on disclosure levels, with the most transparent being current information, followed by limited information and no information tiers. Due to their speculative nature, investors interested in pink sheet stocks should conduct thorough research, exercise caution, and be aware of the associated risks before considering these securities for their portfolios.