Penny Stocks On Reddit See Explosive Momentum On Wednesday

What do penny stocks, Reddit, Twitter, a frog emoji, and ice cream have in common? If you were to say GameStop (NYSE: GME), you’d be 100% correct but let me explain.

Hopefully, you know about the beginning of the Robinhood/Reddit saga from earlier this year. If you aren’t, I’ll give you the 30,000-foot view. In January, users on the now infamous subreddit, r/WallStreetBets, put a thesis together on GameStop following several interesting “findings.” This included a previous bet that we discussed back in 2019 when famed Big Short investor Michael Burry originally took a stock position. GameStop also saw growing interest from Chewy Inc. (NYSE: CHWY) co-founder and former CEO Ryan Cohen.

If you read our article “Penny Stocks Get Big Boost From r/WallStreetBets & Reddit Buying Spree,” you’ll remember why Cohen is an integral piece to this puzzle. In a similar move to Burry and about a year after, Cohen also bought up a large chunk of GME stock, accumulating over 12% of the company by December 2020. He also pushed the company to focus on digital sales instead of retail. Redditors on WallStreetBets started praising the move by GameStop. He’s now sitting on the company’s Board.

The Frog, The Ice Cream Cone, & A Tweet

In a crazy twist of fate, Cohen is back in the spotlight as a catalyst of sorts. Wednesday’s afternoon session was relatively status quo. The market continued recovering from Tuesday’s sell-off, industrials, and energy stocks were steadily rising, and GameStop wasn’t even a thought…until the 2 o’clock hour. This was when Cohen put out a cryptic tweet:

Ryan Cohen GME Tweet

That’s right. It was a tweet with two simple things: 1 frog face emoji and a picture of a McDonald’s vanilla soft serve ice cream in a cone. Just for reference, there weren’t any drastic changes in the trading action of McDonald’s (NYSE: MCD) stock at the time the tweet was made.

In any case, for whatever reason, almost all of the Reddit penny stocks that previously had their trading limited by Robinhood and other brokers began skyrocketing. Are we on the verge of another round of massive short squeezes, or is this the ultimate headache after eating that ice cream tweet too fast…(I tried)?

Reddit Penny Stocks To Watch

  1. Sundial Growers Inc. (NASDAQ: SNDL)
  2. Express Inc. (NYSE: EXPR)
  3. Nokia Corporation (NYSE: NOK)

Sundial Growers Inc.

All of these penny stocks have one thing in common, which is reddit breakouts. However, aside from this hype, these companies also have real fundamental things going on that may be of interest after the excitement dies down. Furthermore, I’d like to point out that these aren’t just good things but also potential risks, as you’ll see with Sundial.

The company has been highly criticized for its history in the cannabis industry. It has most frequently been highlighted for having a half-ton of bad weed returned as it was going public. This is obviously not a “minor detail.” In addition to that, Sundial has been one of the most active companies in the cannabis industry as far as raising money is concerned.

Last week Sundial exercised over 98 million warrants at prices between $0.80 and $1.10 for proceeds of $89.1 million. Before this, the company raised $74.5 million. It also closed on a $100 million offering around that time. This isn’t even half of the financing efforts that the company has been involved with. But I’m hoping you understand that when I say “most active,” you understand the scope of their financings.

[Read More] 4 Hot Penny Stocks Bouncing After Recent Market Sell-Off

Regardless, traders continue flocking to the stock in droves. Since the beginning of the year, the lowest share volume day SNDL stock has seen was 160.8 million. Considering it was at an average price of around $0.67 on that day, we’re talking over $100 million in daily dollar volume. This high-volume trend has been amplified by Reddit traders looking for cheap stocks to buy. Since SNDL is one of the few marijuana penny stocks available on apps like Robinhood, that may also be a reason for so much attention on the stock.

reddit penny stocks Sundial Growers SNDL stock chart

Express Inc.

Clothing retailer Express Inc. was also caught up in the Reddit explosion this year. Shares of EXPR stock shot up to highs of $13.97 at one point this year. This was a huge jump from its early beginnings in 2021, trading around 90 cents. Following the surge and the impending Robinhood restriction to closing orders, only EXPR plummeted back to earth.

Wednesday saw shares spike on reopening optimism during most of the session. Then when the ice cream tweet hit, spiking GME stock, sympathy momentum took hold of Express. During after-hours trading, EXPR shares reached highs of $4.15 as the “Reddit Trade” seemingly had returned.

Earlier this week, Express was in the discussion along with other stocks insiders & institutions were buying. In particular, Charles Schwab Investment Management, Inc. reported a 7.33% stake in the company. This was the latest in a series of institutional stakes reported since the end of January. Schwab joined other institutions, including Vanguard Group, Renaissance Technologies, and Contrarius Investment Management – Check out all EXPR filings.

Something to note if EXPR is on your list is that the company filed an S-3. What did this filing show? Express registered 25 million shares suggesting potential for an offering on the table. Will dilution risk pose an issue after the latest price spike?

reddit penny stocks Express Inc. EXPR stock chart

Nokia Corporation

The entire time that Nokia has been identified as a Reddit penny stock, I’ve been a bit curious. It isn’t overly shorted compared to many other stocks in the market. It also has a relatively large market cap especially considering it’s still a penny stock. Furthermore, it’s a multi-national communications company, far from being considered “the new Blockbuster.” Needless to say, the Reddit hype put a spotlight on the company.

We’ve been covering Nokia for months at this point, watching it move from under $2.50 to over $9.70 this year. Obviously, the latter was a result of moment-fueled hype resulting from retail interest from the Reddit community. Needless to say, Nokia has continued announcing updates and conducting business as usual. It’s almost ignoring the market entirely, making little reference to the current activity.

Read More

In fact, this week, it was named one of the 2021 most ethical companies in the world by Ethisphere. It was also selected by Globe Telecom this week to roll out 5G in the Philippines in a 3-year deal.

reddit penny stocks Nokia Corporation NOK stock chart

Should You Believe The Hype In These Penny Stocks?

Reddit has opened the eyes of institutional and retail investors alike. Not only are both camps figuring out the power each has in the market, but regulators and brokers are also now trying to figure out ways to make trading easier. Concerning these Reddit penny stocks, we’ve already seen that they can fall just as quickly as they can climb. Will this momentum last the second time around, or is another huge drop coming shortly?

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