How Does A Short Squeeze Happen?
Understanding that shorting penny stocks essentially means a bet against it, we can assume that this is a bearish trading style. Furthermore, the metrics of actually shorting a stock involve borrowing shares that need to be returned to the lender. The price doesn’t matter, only the amount of shares borrowed.
You make money shorting stocks by taking borrowed shares, selling them at one price, then if you’re correct and a stock declines in price, the short seller buys these shares back (at the lower price) in order to return them to the lender. We discussed this in an article earlier this week: 5 Short Squeeze Penny Stocks To Watch For November 2021. For example, if there’s a stock trading at $5 and it drops to $4, a short seller could pocket the $1 difference if they were to sell short at the $5 5 Top Penny Stocks To Buy For Under $5 On Webull Todaymark.
Short Squeezes & Penny Stocks
But what happens if the same $5 stock went up instead of down? The short seller still needs to repay its borrow. Let’s say it runs to $6 instead of $4. In this case, the seller needs to buy back share for $1 more than they sold them for. This is how short sellers lose. It’s also part of what triggers “the squeeze”. Retail buying pushing stocks higher with shorts scrambling to cover, “squeezes” them out of the trade.
Stocks like AMC Entertainment (NYSE:AMC), Digital World Acquisition Corp. (NASDAQ:DWAC), Eastman Kodak (NYSE:KODK), and many others have all experienced this phenomenon at one point or another this year. Whether or not that will be the case for this list of penny stocks is to be seen. So whether it’s time to buy or avoid is something I’ll leave up to you.
5 Short Squeeze Penny Stocks To Watch
- ContextLogic Inc. (NASDAQ:WISH)
- Senseonics Holdings (NYSE:SENS)
- Romeo Power Inc. (NYSE:RMO)
- Vinvo Ventures Inc. (NASDAQ:BBIG)
- Bitfarms Ltd. (NASDAQ:BITF)
1. ContextLogic Inc. (NASDAQ:WISH)
Unless you’ve been living under a rock, ContextLogic is a company you’ve probably heard of. It’s the public company behind the popular mobile eCommerce platform, Wish. There’ve been memes about the site and its products being the lesser quality version of the “real” counterparts. It’s also been compared to companies like Amazon (NASDAQ:AMZN) for its captivating influence over retail shoppers. Whatever you want to call it, WISH stock remains a constant among retail traders.
Recent WISH Stock News
While the stock itself has tumbled this year, the company continues building its global footprint. Earlier this month, the company appointed a new CFO, Vivian Liu, to head up ContexLogic’s global financial operations. She’s also the lead for Wish’s merchant acquisition team. Her prior experience includes stints at Lexmark, Huawei, and Cisco Systems, among other names.
Is WISH A Short Squeeze Penny Stock To Buy?
Looking at short float percentage data from Fintel, WISH stock’s percentage hovers around 17%. While this isn’t the largest short interest among names on this list, the 1-month change shows a considerable spike. It will be interesting to see if this becomes a factor heading into November.
2. Senseonics Holdings (NYSE:SENS)
Senseonics has been on a few of our lists of penny stocks with higher short interest. Despite there not being any individual days where SENS stock has exploded thousands of percentage points, the medical technology company has experienced a strong move in 2021 overall. In January, shares were trading below $1 per share. As of this week, SENS stock sits around $3.40. By all accounts, you could say that a move of more than 200% year-to-date isn’t half bad.
The last few months have seen the company building its commercial strategy behind its implantable glucose monitoring devices. Senseonics’ Eversense platform focuses on continuous monitoring without the need for things like fingerstick blood glucose measurements for diabetes.
Recent SENS Stock News
Aside from collaborating with organizations like University Hospitals Accountable Care Organization in Cleveland, Senseonics has an upcoming event that could be a point of interest. Next month on November 9, the company will release its Q3 financials and host a conference call.
Is SENS A Short Squeeze Penny Stock To Buy?
Looking at the short data, Fintel shows that the short float percentage for SENS stock sits around 26% as of this article. With upcoming earnings and an overall bullish move for the year, will SENS stock be on your list of names to watch right now?
3. Romeo Power Inc. (NYSE:RMO)
Energy has become one of the cornerstones for big market-moving trends. Romeo Power specializes in energy technology for commercial vehicle applications. This includes battery development for battery electric vehicle manufacturers. With the electric vehicle industry growth we’ve seen recently and excitement stemming from the likes of Tesla (NASDAQ:TSLA) and Lucid Motors (NASDAQ:LCID), the EV ecosystem has come back into focus.
RMO Stock News
Despite the company securing new manufacturing facilities and partnering with companies to advance its product offerings, Romeo hasn’t sat well with analysts. The most recent updates concerning the company actually come from Cowen and Vertical Group analysts who both downgraded RMO stock. In tandem with that, they also slashed price targets by large margins.
Is RMO A Short Squeeze Penny Stock To Buy?
In light of the negative analyst sentiment, it shouldn’t be surprising to see higher levels of short interest in the stock. According to Fintel, the short float percentage on RMO stock is hovering around 22-23% right now. Other outlets show short interest sitting slightly higher. However, with a surge of new interest in EV stocks, will RMO be a name to follow heading into November?
4. Vinvo Ventures Inc. (NASDAQ:BBIG)
Similar to WISH, Vinco Ventures has become one of the mainstays on the list of penny stocks retail traders have followed this year. However, unlike WISH, BBIG stock is up considerably since the start of the year. It was actually one of the companies we had discussed as early updates from the company shed some light on what would become a big deal for Vinco later this year.
Trading near the $3 mark, Vinco had just announced that its partner, Zash entered into a definitive agreement to acquire a majority controlling interest in Lomotif Private Limited. It’s a Singapore-based video-sharing social networking platform becoming a rival to TikTok and Kuaishou.
Fast-forward to now and a lot has happened including the deal going through and now Vinco plans on changing its name to Zash.
BBIG Stock News
Aside from the name change, Vinco has also continued expanding its reach in different industries via its subsidiaries. For instance, the company’s Emmersive Entertainment unit extends its reach into the emerging NFT (non-fungible token) space. Late last month, Vinco announced that Emmersive would present artist, Super Buddha’s E-NFT titled “GLOBAL UNITY,” starting at $3.
Vinco also plans to spin-off one of its crypto-related subsidiaries, Cryptyde, which will become publicly traded under the symbol TYDE according to the company. Cryptyde is focused on blockchain technology and digital assets. The spinoff is also expected to result in a dividend for shareholders.
Is BBIG A Short Squeeze Penny Stock To Buy?
According to Fintel data, BBIG stock’s short float percentage sits around 27% at the time of this article. Considering the immense pressure that the stock has been under over the last few weeks, it isn’t very surprising. However, in light of everything under development, it will be interesting to see how the market responds heading into November.
5. Bitfarms Ltd. (NASDAQ:BITF)
Sticking with the cryptocurrency trend, Bitfarms is another one of the popular names on this list of penny stocks. The company specializes in Bitcoin mining and has been consistently volatile over the last few months. When cryptocurrency prices fluctuate, stocks with direct exposure have tendencies to follow suit.
Recent BITF Stock News
While Bitfarms benefited briefly from the news of a fresh Bitcoin future ETF launching earlier this month, there are a few other things to keep in mind. Namely, Bitfarms recently expanded its Quebec mining operation boosting its Bitmain mining portfolio by 450 miners. Heading into November, Bitfarms could be on the radar as it is scheduled to report its Q3 earnings on November 15.
Is BITF A Short Squeeze Penny Stock To Buy?
Similar to all penny stocks mentioned, whether or not they are a buy is the decision of traders. But we can give some data to take note of. According to data from Fintel, the short float percentage on BITF stock sits just over 42% right now.
Short Squeeze Penny Stocks, Risk & Reward
Short squeezes can be some of the most exciting times of anyone’s trading career. There are few instances where you’ll see stocks explode hundreds or thousands of percentage points within such a short period of time. Yet, with that potential reward comes much higher levels of risk. At the end of the day, stocks are shorted because traders are betting against their businesses. All in all, if you think you’ve found a great short squeeze penny stock to watch, knowing how to handle volatile trading can give you a leg up at the end of the day.