Penny stocks are shares of companies that trade for less than $5 per share. They also tend to represent smaller companies. Their higher risk/higher reward makeup generally makes them a hot topic for retail traders. Any given day might see low-priced shares exploding to the upside to the tune of hundreds of percentage points. The bottom line is if you’re looking to buy stocks like these, be ready for volatility.
That type of stock market environment also includes other contributing factors. These may amplify the wild activity in the market. In this article, we look at one of the phenomena that can quickly speed up price spikes and drops for penny stocks: short squeezes.
What is a short squeeze in the first place? A short squeeze is a situation where investors bet that a stock’s price will fall (by “short selling” the stock). If they’re right in their “bet,” they’ll make money when stocks go down. When shorting a stock, they borrow shares from their broker, sell them, and when the stock price falls, they repurchase the same quantity of stock and return it to their broker.
But if they’re wrong, they could be in for a rude awakening.
A short squeeze will force them to buy shares at a higher price to limit their losses. This buying activity can cause the stock’s price to rise further, creating a “squeeze” on the short sellers. Short squeezes can be triggered by various factors, such as positive news, a change in market sentiment, or a lack of shares available to be borrowed for short selling. The first place to look for short-squeeze stocks is short interest.
Short Data: Fintel — 33.45%, TDAmeritrade — 33.34%
Chances are you’ve been to or driven by a Rite Aid at some point in your life. But you might not know that, as of now, it’s trading as a penny stock. The company ran into trouble late last year thanks to bad earnings and a bearish outlook on 2023 performance figures. RAD stock has rebounded a bit toward the end of January, and short interest may be a focus.
Both data sources cited above have the RAD stock short float percentage sitting around 34%. The company recently named an interim CEO, Elizabeth Burr, and simultaneously began a search for a permanent one. In response, Burr said in a January 9th PR, “Having served as a Director since 2019, I have great respect for the important role Rite Aid plays as a full-service pharmacy improving health outcomes for millions of Americans…With Rite Aid’s well-established brand and its committed and talented team, I look forward to delivering on our business strategy and driving value for all our stakeholders.”
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Short Data: Fintel — 28.57%, TDAmeritrade — 15.68%
As you can see, the short float data on Sana Biotechnology is a bit skewed right now. Fintel shows it closer to 30%, while TDAmeritrade has it sitting below 16%. Regardless, the company continues making announcements, and the share price has increased over the last month.
Sana develops engineered cells to use as medicines. This week, in particular, the company has gained a bit more attention thanks to one of its first significant pieces of news in 2023. Sana announced that the FDA cleared its Investigational New Drug application to begin a first-in-human study of its SC291 platform. This is Sana’s treatment candidate for patients with B-cell malignancies.
Steve Harr, Sana’s President, and CEO, also mentioned in a press release, “We look forward to understanding the safety, potency, and persistence of these cells in patients, and we are optimistic that SC291 can become an important medicine for patients with these difficult cancers. Furthermore, this platform forms the backbone for additional development of CAR T cells targeting CD22, BCMA, and beyond.”
The company expects initial clinical data from the SC291 study later this year.
Short Data: Fintel — 25%, TDAmeritrade — 19.22%
Shares of EV company Canoo Inc. are on the list of penny stocks with higher short interest this week. Fintel and TD show the data sitting between 19% and 25% as GOEV stock struggles to hold levels at the 50-day moving average.
While most of January has been uneventful for the stock, the last week has been much different. Canoo has reported several key updates heading into month-end. Canoo inked a partnership with GCC Olayan to exclusively distribute its EVs in Saudi Arabia. The company also appointed a Chief Financial Officer, Ken Manget.
Regarding the Saudi Arabia distribution partnership, Canoo emphasized the deal’s potential in a PR earlier this week.
“The Olayan Group is a global business leader with decades of experience in distribution partnerships with some of the world’s leading brands, and they are a proven partner to support EVs in the region,” said Tony Aquila, Chairman & CEO at Canoo.
It may be worth noting that Saudi Arabia’s Vision 2030 set a course for EV adoption and sustainable mobility solutions to be put in place. Further, the Saudi Green Initiative has set a goal of 2060 to reach net zero emissions.
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Short Data: Fintel — 34.86%, TDAmeritrade — 30.21%
Shares of Gossamer Bio could be in focus for some after seeing the latest short data. It currently sits in the low 30% range as the company’s shares wade water in the stock market this year. No significant headlines have been released to date.
Last year, Gossamer announced Phase 2 trial data in its study of seralutinib for treating pulmonary arterial hypertension. Among several points of focus was a serious adverse event in the seralutinib arm of the study. Overall treatment-emergent adverse events were reported in 86% and 93% of patients in the placebo and seralutinib arms.
Even with that as the case, there was optimism regarding efficacy results. Pulmonary Hypertension Division head at the University Hospital in Giessen explained, “highlit compelling potential differentiation for seralutinib as an anti-proliferative, anti-inflammatory, and anti-fibrotic therapeutic candidate with possible reverse remodeling effects.”
Earlier this month, State Street Corporation and Millennium Management filed Schedule 13Gs showing stakes in GOSS stock ranging from 5.1% to 29.47% (State Street). While those reports have been out for weeks, it may be something traders are paying attention to if GOSS is on their list of penny stocks to watch.
Rite Aid Corp. (NYSE: $RAD )
Sana Biotechnology Inc. (NASDAQ: $SANA )
Canoo Inc (NASDA: $GOEV )
Gossamer Bio Inc (NASDAQ: $GOSS )
Penny stocks are shares of companies that trade for under $5. While that may be the standard definition, it isn’t the only one if you ask retail traders. In the stock market today, most day traders will look at some of the cheapest of the bunch, the ones that can be bought for pennies on the dollar. In this article, we look at a few more of these low-priced stocks to see what traders are looking at and what may be on the horizon that could be a source of speculation.Click Here To Watch TTG Live On YouTube
Why would anyone want to buy such risky stocks? The simple answer is to capitalize on volatility. When you talk about penny stocks under $1, you’re talking about stocks capable of jumping significant percentages without seeing overall prices climb aggressively.
Case in point, any stocks under $1 need to move 10 cents or less to experience a 10% move or more. The same can’t be said for stocks like Apple or NVIDIA. Take, for instance, Akanda Corp. (NASDAQ: $AKAN ) on Thursday. The medical cannabis company saw its stock explode over 150% from just a 30-cent price increase. There weren’t any company-specific updates. However, FDA-related headlines regarding exploring regulatory pathways for CBD products prompted speculation about cheap marijuana stocks.
Of course, these big moves can happen quickly in either direction, which is why there’s so much risk involved in cheap stocks like these. It’s up to you to decide if the risk is worth the reward. This is an update on the list of penny stocks from our article Best Penny Stocks To Buy? 4 Under $1 To Watch In January 2023.
Last month we discussed Avaya Holdings on a list of penny stocks with high short interest as traders were hunting for the next big breakout company. AVYA stock didn’t experience an explosively aggressive move like AMC or GME stock. However, since that update, it has maintained a strong rebound. In fact, between then and now, the penny stock has climbed from around $0.15 to highs of over $0.40. That trend continues this week as shares tick higher.
One of the sources of speculation for Avaya is its financial positioning. A few weeks before the end of 2022, Avaya disclosed business information that “it confidentially shared” with specific stakeholders. Right now, a comprehensive resolution is ongoing to potentially strengthen the company’s balance sheet and business overall.
In a December update, Alan Masarek, Avaya’s Chief Executive Officer, said, “We are pleased to remain engaged in constructive discussions with all of our financial stakeholders to enhance our capital structure, increase liquidity and accelerate our investment in innovative products and solutions.”
Avaya was granted earlier this month titled “Sentiment Analysis (Emotion Artificial Intelligence) of Message Posting In Group Conversations,” which helped boost sentiment. The company also announced it was named a “Leader” in a report titled The Aragon Research Globe™ for Conversational AI in the Intelligent Contact Center (ICC) 2023 by Aragon Research, Inc.
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Penny stocks and the underlying companies carry plenty of risks. One of these can be a failure of the business overall. While Avaya hasn’t sounded the alarm that it’s “failing,” reports from Bloomberg have cited that Avaya may have been in talks with first-lien lenders for a $450 million loan that would fund operations during a potential bankruptcy filing. Of course, Bloomberg cited “people with knowledge of the matter.”
This week, we also see that a new 13G was filed, showing BlackRock, Inc. has an 8.8% stake in the penny stock.
Electric vehicle technology company Cenntro has focused on developing a portfolio of commercial electric vehicles. Late last year, its Class 4 Logistar 400 received a US Environmental Protection Agency Certificate of Conformity. This confirmed the Logistar 400 conformed to the EPA’s regulations and emission standards.
Whether for last-mile delivery or municipal services, the Logistar 400 was designed to carry a max payload of over 7,400 pounds with an 84-mile range. Earlier this month, Cenntro’s portfolio was showcased at the Consumer Electronics Show in Las Vegas. Its lineup included a hydrogen fuel cell vehicle (LM864H), a Class 3 Van (Logistar 300), and its iChassis line of three programmable vehicles used for automated and autonomous driving.
There haven’t been any recent headlines from the company since its CES event. However, industry sentiment could promote some bullishness in the stock market this year. Thanks to the rallies in top EV stocks like Tesla (NASDAQ: $TSLA ), the industry is getting some long-awaited attention. Year-to-date, CENN stock has climbed from $0.44 to over $0.61 or roughly 38%.
Last month Asensus fell to new 52-week lows after having slowly bled out during November and most of December. However, news right before the New Year helped promote some bullishness around the company and, in turn, its stock. Asensus initiated a Senhance program at the Kashiwa Kosei General Hospital of Japan.
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The company has explained that its Senhance platform in Japan is intended to “assist in the accurate control of laparoscopic instruments for visualization and endoscopic manipulation of tissue including grasping, cutting, blunt and sharp dissection, approximation, ligation, electrosurgery, suturing, mobilization, and retraction in laparoscopic surgery.”
ASXC stock has exploded in 2023 compared to the end of 2022. With news-fueled momentum, it will be interesting to see what follow-through comes (if any) after headlines have had time to get digested.
HC Wainwright recently reiterated coverage on ASXC stock with a Buy rating. It also maintains a $3 price target. Based on current levels of around $0.70, the ASXC stock forecast price is 328% higher.
Avaya Holdings Corp. (NYSE: $AVYA )
Cenntro Electric Group Ltd. (NASDAQ: $CENN )
Asensus Surgical Inc. (NYSEAMERICAN: $ASXC )
PolyPid Ltd. (NASDAQ: $PYPD )
Troika Media Group (NASDAQ: $TRKA )
Novo Integrated Sciences (NASDAQ: $NVOS )
Lightning eMotors (NYSE: $ZEV )
$tsla. Price action tomorrow will be very interesting to observe.
$msft ER result. Azure revenue growth is 31% yoy but 37% in constant currency basis. This is not too shabby if you ask me.
Netflix. The fact that they can reaccelerate in revenue and gain subscribers during a recession is telling me this is a company that can continue to do well in streaming space and print money in the foreseeable future.
Price action is up 100% since mid 2022 dip is also suggesting they might continue to do well.
I had to shop there every week. I am able to find what I need there and it's not like you have many other places to buy groceries. $wmt
Airbnb has been a great success story over the last few years and has been an amazing success during the pandemic as well. The fact that you can run Airbnb and get half+ occupancy during Covid is pretty impressive. The stock price dropped a lot in 2022 so this might be a good place to start buying. $abnb
We know mobile apps are becoming increasingly popular, which means more focus are put on ASO, as opposed to traditional SEO where desktop browsers plus Google Search are the only way that you can market and sell your stuff. Also, with openAI it is possible that Google search ($goog) will be replaced with something else, making investing in $semr or $smwb a less viable option and one that should be avoided at all costs. :(
Tesla current quarter EPS estimate is 1.27. 1.27*4=5.08. Yesterday it was trading at 105 premarket which means you're looking at around PE of 105/5.08=20.66 for the leading player in the EV space in the next 10 years. This is peak insanity in the market thanks to the Fed. $tsla
$BRMK This stock has been taken to the woodshed. It's down almost 60% YTD, and even as other mortgage REITS like $AGNC or $NLY have been making up ground (see here) $BRMK kept falling. One obvious reason for the recent underperformance is the departure of the CFO in October, who was followed three weeks later by the CEO.
But now, after 7 (!) consecutive down weeks, $BRMK managed to stay in the green during the week that just ended. The $SPY, on the other hand, is now down 3 weeks in a row during a time of the year that's normally good for a little holiday cheer. So, absent any surprises, I could see bears taking a break next week and that could be a good backdrop for $BRMK to continue to outperform. So,I am long for a swing.
I've been using Backblaze's B2 service (which is basically a drop-in replacement of AWS S3) for a month. And I love it. It costs me about 25¢ per month (yes, cents, not dollars) to back up a 100GB home directory, and maintain multiple snapshots for different points in time. The dedication to customer support by the Backblaze team is exemplary. If anyone asks a question on the /r/Backblaze subreddit, they're assured to get an exhaustive reply from a Backblaze staffer. So, as a user, I have nothing bad to say about them.
As an investor, though, I wonder whether the $BLZE mode of operation will continue to gain traction. $BLZE competes against $BOX and $DBX as a pure-play cloud storage provider. As the price for consumer backup services kept dropping towards zero, all three companies have pivoted towards developer/business cloud storage. But $BOX and $DBX have gone a lot further by adding team collaboration, file sharing, and digital workflow support features to their solutions. This has helped both, $BOX especially, to justify higher prices. Amazon AWS, which prices its S3 storage service about 3-4x higher than B2, goes yet further, embedding S3 deeply into its vast array of cloud-based services from web hosting to machine learning. Now, even AWS customers could avoid S3 and pay a lower B2 bill, instead. But does that make sense? I am not an expert on this but to me, it seems like it would add complexity and reduce performance, and I am quite skeptical that many customers would go that route.
From a valuation perspective, $BOX is clearly the most expensive at 5.1x EV/FwdSales. $BLZE is at 1/3 of that, with a 1.7x multiple, and $DBX in the middle at 3.8x. But this seemingly low multiple for $BLZE is contingent on a robust 25.8% median revenue growth forecast for next year. The targets for $BOX and $DBX are lower and seem more achievable. Also, $DBX has been profitable on a GAAP basis for the last 7 quarters, $BOX for 2. $BLZE is behind, having just turned in its biggest quarterly loss in USD terms.
From the technical side, it's interesting to note that there seems to be a significant buyer in the market for $BLZE. For the last week, the price has, again and again, dropped to $5.30, only to find demand there. That seems like a good sign, although the total volume for $BLZE is still quite modest.
So, I'd really love to hear from anyone else about $BLZE, $BOX, or $DBX. To finally address the previous post: I broadly share the sentiment that cloud software as a whole is in a precarious competitive situation. A lot of niches seem to suffer from too many undifferentiated providers competing away the opportunity for positive margins. Cloud communications and cloud application monitoring are two sub-industries where this dynamic seems particularly noticeable. The fact that both $DBX and $BOX have turned the corner to profitability, while still maintaining positive growth tells me that cloud storage might actually enjoy a somewhat more rational competitive state.
"Bear Market Alert"
Downtrending with Sellers controling the market
Sellers are increasing
The price point indicates a reversal
Demand Zone $366 Proximal - $348 Distal
We'll know by 11:00 am tomorrow.
"Cloud-native organizations and those moving large portions of their operations to the cloud will be well served by Datadog's strengths in observability, OOTB integrations, and data-handling capabilities," the Forrester report said in the research.
Let me share with you my journal about using MongoDB as a service.
MongoDB is a popular database technology, and can be a good choice for many applications. It's a reasonable choice for any companies that's doing something very minimal about a database.
Creator of stockideashq.com here.
Apple is an innovative and forward-thinking company that has revolutionized the way we interact with technology. $aapl
Silvergate is one of the main settlement bank between crypto firms and users for fiat. When this becomes trouble the world would have a hard time converting to and from fiat to crypto. Definitely not a good news for crypto sector. $si
stocks down 11% in pre-market trading.
The company reported strong revenue growth of 69% yoy. Their user base and headcount is growing as well. All in all, this call was good news for investors and should help to continue to drive the company's success going forward.
The price spiked 20% in after-hour trading. $gtlb
Cramer might have accidentally saved this one. $cvna