Will The Snowflake IPO Signal Sympathy Trades For These Penny Stocks?
Penny stocks are well-known for their high-risk, high-reward momentum in the stock market. Half the reason traders look for penny stocks to buy is for quick gains. Unless you’ve got a high tolerance for big price movement, you’re probably not looking for penny stocks to invest in. However, that doesn’t mean broader market events can’t become catalysts for certain trades in the short term.
Generally speaking, the vast majority of people with online brokerage accounts are traders. As such, a short-term approach to the stock market is the preferred strategy. There are plenty of ways to find some of the best penny stocks to buy and flip quickly. One of those ways is identifying potential catalysts. Earlier today we discussed some penny stocks on Robinhood & Webull that were gaining attention ahead of this week. The potential catalysts involve upcoming presentations and data readouts this week. While there’s no guarantee that they are actually catalysts, the likelihood that they’ll at least be a topic of discussion is high.
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What other catalysts can play a role? As discussed above, sympathy trades can present short-term potential for some sectors and stocks. We saw how that can play a big role this year with coronavirus-related headlines. If you recall, some of the larger blue chip stocks would release news pertaining to specific treatments. More times than not, we’d see certain penny stocks rally in sympathy with those blue chips. Again, there’s no guarantee that momentum will be triggered at all, but it is a unique phenomenon to take note of.
Penny Stocks & IPOs: Is Snowflake A New Catalyst?
This will be another big week for IPOs. Mainly tech will have a spotlight placed on it. One of the most widely anticipated tech stock IPOs of the year is set to happen this week. The Snowflake IPO has triggered a ripple across big tech recently. It saw companies like Salesforce and Berkshire scramble to position. Let me explain a bit about the Snowflake IPO before we discuss the sympathy idea.
This IPO is set to debut at a price of $75-$85, which could value the company at nearly $24b on the higher end of that range. The Snowflake IPO itself could raise more than $2.7 billion alone. While Salesforce’s participation in this IPO isn’t a surprise, Bershire’s is. It’s not every day we see The Oracle of Omaha investing in a tech start-up.
As far as where Snowflake standing going into its IPO, it saw second-quarter revenue up 121% to $133 million. The company also has over 3,100 customers, with 56 reaching the $1 million revenue mark according to reports. With a clear focus on cloud computing, this IPO has definitely gotten other tech investors excited. What is the Snowflake IPO date? This week, Snowflake is expected to IPO on September 15th.
It isn’t the only tech name aiming for an IPO this week, however. We’ve also got Unity (gaming tech), JFrog (cloud software), and Sumo Logic (cloud software) set to IPO between September 15th and September 17th. So with the anticipation of big SAAS stock IPOs to hit the market this week, let’s take a look at some tech penny stocks to watch as well.
Penny Stocks To Watch #1: Inuvo, Inc
Inuvo, Inc. (INUV Stock Report) is a data-driven tech company with a focus on developing its main product, IntentKey. The solution is a programmatic media tech powered by patented AI-generated audience data. Utilized mostly in a marketing & advertising setting, IntentKey identifies the earliest signals of consumer intent. The process involves analyzing over 200,000 consumer content engagements per second through the IntentCloud. This gives the ability to reach users in near real-time.
While shares of INUV stock are up about 30% year-to-date, this penny stock is no stranger to big moves. Earlier this year, shares of INUV stock reached a high of $1.11. The lead-up to that came as the company focused on COVID-19. Specifically, in May, Inuvo found that its IntentKey clients and prospects were searching for a solution to help them better understand and adapt to the impact of Covid-19 on their businesses. Momentum continued progressing as Inuvo directed its technology toward contactless payment solutions.
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After dropping during August, INUV stock seems to have found a level of support around its 200 day moving average. Since the beginning of September, shares have been range-bound between $0.34 and $0.44 for the most part. Not only could the Snowflake IPO shed some additional light on tech penny stocks like INUV, Inuvo also presents at the Lake Street Best Ideas Growth (BIG4) Conference this Thursday.
Penny Stocks To Watch #2: VirnetX Holding Corp.
Just sliding under the penny stock threshold last week was VirnetX Holding Corp. (VHC Stock Report). The company offers a suite of security services including options for communications, data transfer, and even application security. Year-to-date, VHC stock is up roughly 79% and has also experienced a relatively sideways trend recently.
One of the biggest focal points for this company has been with regard to a near-decade old patent case with Apple (AAPL Stock Report). Yep, this is the same Apple that provides you with the iPhone, Watch, MacBook, etc.
The case was originated in 2010 where VernetX accused Apple of infringing on certain patents. They were allegedly related to secure networks and communications links in Apple’s FaceTime app. Of course, Apple made efforts to appeal a federal court’s ruling that its VPN-on-demand feature violated two of VirnetX’s patents. However, earlier this month, VirnetX announced that the U.S. District Court for the Eastern District of Texas ruled that Apple is not entitled to relief from having to pay VirnetX almost $440 million for infringing on its patents.
There’s definitely been a lot of layers to peel back from this story over the years. However, the recent excitement in September stems from the latest ruling. Whether or not this next round of tech IPOs impacts VHC stock is yet to be seen. However, it is worth noting that the recent trading volume for the penny stock has clearly increased over the last few weeks. Citadel Investment Group, D.E. Shaw, and Arrowstreet Capital are among funds currently holding a stake in VHC stock.
Penny Stocks To Watch #3: Conduent Inc.
Conduent Incorporated (CNDT Stock Report) is another one of the tech penny stocks to watch this quarter. The company focuses on business continuity technology. Specifically, Conduent handles business process services in things like transaction-intensive processing, analytics, and automation. We began following this company’s developments in early August after an update about its Conduent Transportation unit. It had implemented phase 1 of its fare collection system across the De Lijn public transportations network in Belgium. De Lijn could then launch contactless payment options on public transports.
Since then, CNDT stock has also traded in a relatively tighter range. Shares have maintained levels close to the 200 day moving average over the last few weeks as well. Last week Conduent announced a collaboration with Buoy Health and IBM Watson Health. The companies will integrate their technologies and health care resources onto Conduent’s Life@Work platform. Conduent also presented at Citi’s Global Technology Virtual Conference. This is important to note because it was there that the company gave an important update.
Clifford Skelton, the CEO of Conduent, participated in a Fireside Chat at the Conference. During the conference, Mr. Skelton stated that the Company expects Q3 2020 revenue and Adjusted EBITDA margin to be at or above the mid-point of the previously issued guidance ranges. That’s also “despite a lack of extension of Federal unemployment insurance supplement as of this point in time.”
Skelton also said that Conduent is on track to meet or exceed its full-year targeted 60% improvement in year-over-year new business signings.