To understand nano-cap stocks and their role on the stock market, it is important to define their key features that set them apart from the rest of the market. 

Nano-cap stocks have market caps lower than $50 million, which can create unique scenarios and affect investor behavior. 

Here are some key characteristics of nano-cap stocks:

• Small Market Capitalization: Nano-cap stocks generally have market capitalizations ranging from a few million dollars to just a few hundred million dollars. This makes them significantly smaller than mid-cap and large-cap stocks
• Lack of Liquidity: Nano-cap stocks tend to have lower trading volumes compared to larger stocks. As a result, they can be illiquid, meaning there may be fewer buyers and sellers in the market, making it challenging to buy or sell shares without affecting the stock's price
• Higher Volatility: Due to their small market capitalization and lower trading volumes, nano-cap stocks are often more volatile than larger stocks. Price fluctuations can be significant, leading to potential gains or losses for investors
• Limited Analyst Coverage: Nano-cap companies often receive less attention from analysts and financial media compared to larger companies. This lack of coverage can make it more challenging for investors to access reliable information and research on these stocks
• Lack of Reporting Requirements: Nano-cap companies may not be subject to the same stringent reporting and regulatory requirements as larger, publicly traded companies. This can make it more difficult for investors to assess the financial health and performance of these companies

It is important to note that nano-cap stocks are highly risky investments and thorough due diligence is required for prospective investors to gather as much information about the company as possible. 

To better illustrate how a nano-cap stock works, let’s look at a real-life example of one. Arrival S.A (NASDAQ:ARVL) is a nano-cap stock with a market capitalization of just $18 million. 

Arrival is working on developing electric buses and mini buses for various applications.

However, you may be wondering how an automaker has such a small market capitalization.

Arrival is a pre-revenue stock that has been hemorrhaging cash ever since going public in 2020.

For this reason, investors have been skeptical about the company’s ability to deliver its first road-ready vehicles before running out of cash reserves. 

This investor skepticism has grounded the stock, which once had a market capitalization in the billions. 

Arrival is far from an isolated case and many out of favor companies have become nano-cap stocks in the past. 

Overall, nano-cap stocks are a diverse group of stocks that include companies that have fallen out of favor with the investment community, as well as companies with small-scale operations. 

• Nano-cap stocks are listed by some of the smallest publicly traded companies on the market 
• These stocks are highly volatile due to a lack of trading volume 
• Some nano-cap stocks represent companies that were once popular among investors and have now fallen out of favor, resulting in a gradual decline in market capitalization
• Typically, nano-cap stocks have a market cap of less than $50 million, although this figure can vary