A stock whose historical trading volume is very low and whose bid-ask spread (the difference between bid and ask prices) is wide. Even though a thinly-traded stock may be publicly traded, but its trading volume in the market may not be large enough to assimilate the sale of the block held by public investors. This results in blockages in the stock holding, making the stock of less value than the price quoted for the shares on the stock market.

In general, “thinly traded” denotes illiquidity, i.e., a situation where the number of buyers and sellers is very small.