Whether you’re looking for penny stocks to invest in or ones to day trade, you can’t ignore the massive swings these small-caps can experience. In the stock market today, we’ve seen no shortage of uncertainty. Russia/Ukraine fears, virus concerns, and, of course, inflation has sparked significant fluctuations in share prices across numerous industries. But when you’re talking about penny stocks, it’s more of a day-to-day trend.
Even when the stock market is down, you’re likely to find a handful of penny stocks making new highs for the week. One of the latest trends we’re seeing emerge involves short squeeze stocks.
Thanks to big moves from AMC Entertainment (NYSE: AMC) and GameStop (NYSE: GME) early in the pandemic, retail traders hunt for stocks with higher short interest. We’ll discuss the make-up of a short squeeze and why it can be important later in this article. We’re also looking at some penny stocks with higher short interest.
- Bit Digital Inc. (NASDAQ: BTBT)
- Exela Technologies (NASDAQ: XELA)
- 22nd Century Group (NASDAQ: XXII)
- Vinco Ventures (NASDAQ: BBIG)
Bit Digital Inc. (NASDAQ: BTBT)
The first name on this list of penny stocks is no stranger to market volatility. This year, the big spikes and drops in cryptocurrency prices have driven wild market sentiment. The last four months have seen Bitcoin prices reach record highs and fall to some of their lowest lows in months. For Bit Digital, it has a direct relationship with digital currency.
The company specializes in digital mining. Its recent foray into environmental impact initiatives has put it in a different light and one that’s gotten the company involved with government platforms. In particular, Bit Digital intends to provide written testimony on a proactive approach to digital mining.
In a January update, CEO Bryan Bullett expanded on this plan, “Our company has made it a point to take a leadership position regarding sustainable practices in the crypto mining industry…It is at the core of what we do and who we are because Bit Digital understands that to be successful, our operations must drive innovation and economic opportunity for all members of society—while doing so in a sustainable and eco-friendly manner.”
Is BTBT A Short Squeeze Penny Stock?
As Bitcoin prices fluctuate, so has BTBT stock. The recent dip may have also brought some added pressure from short-sellers. According to Fintel.IO’s most recent data, the current short float percentage on BTBT stock sits at 17.97%.
Exela Technologies (NASDAQ: XELA)
Share of Exela Technologies gained interest from retail traders earlier this quarter. The sub-$1 stock spiked in early February, testing highs of $0.95. One of the catalysts adding to the excitement was news of a 100 million share buyback. The company announced that shareholders could exchange blocks of 25 shares of common stock into a tradable $25 note due 2029 with a 6% annual interest rate. This represented and still represents a premium to the current retail price. With the expiration date of February 24th, the market saw this as a bullish sign as XELA stock surged higher.
In addition, with higher virus rates, its business process platform has come back into focus. Particularly speaking, Exela’s intelligent document processing platform is being leveraged by virtual work and gig economy customers. Earlier this month, Exela announced that the Work-From-Anywhere platform had enrolled over 6,000 users with a plan to reach over 25,000 by the end of the year.
Is XELA A Short Squeeze Penny Stock?
In light of the buyback news and recent customer milestone, it seems that XELA stock is back in focus and for more than just fundamental developments. If we look at Fintel’s data, we see that the current short float percentage sits right around 8.1%. While this isn’t a significant figure compared to others on this list of penny stocks, Fintel also shows a substantial increase from the short float percentage compared to 1 month ago.
22nd Century Group (NASDAQ: XXII)
Most of February was strong for 22nd Century stock as shares bounced back from a January sell-off. Last Friday, however, XXII dropped hard one day after reporting big news for one of its farms. 22nd Century said it had secured USDA Organic Certification for its Needle Rock Farms. Accordingly, the company explained the certification would allow it to charge a premium price and boost margins for its biomass crops.
Despite the dip, it looks like XXII stock is back on the move to start the week. Shares have already bounced by more than 6%. One of the upcoming events on the radar right now is 22nd Century’s next round of earnings. It will report Q4 and full-year results for 2021 at the start of next month. So if it’s one of the names on your list of penny stocks right now, keep March 1st in mind.
Is XXII A Short Squeeze Penny Stock?
According to Fintel data, the short float percentage in 22nd Century sits around 9%. Like XELA, this isn’t the largest among the group. However, it is slightly higher than the percentage was one month ago.
Vinco Ventures (NASDAQ: BBIG)
Vinco Ventures remains a hot topic among retail traders. With a pending crypto spin-off and the continued roll-out of its digital entertainment and media platform, Lomotif, there’s been no shortage of things to follow lately. Last week, Vinco announced that through its joint venture, ZVV Media Partners, Lomotif’s LoMoTV joined with Shaquille O’Neal in producing his Big Game Weekend Pary “Shaq’s Fun House.”
The news came just a few weeks after Vinco gained a bit of notoriety for its potential Cryptyde Inc. spin-off. The blockchain technology company entered into an agreement to raise $42 million to put to work. Brian McFadden, President and Chief Executive Officer of Cryptyde, Inc., explained, “We are focused on executing on our vision to become a leader in the blockchain and web3 space. We are actively pursuing growth opportunities and looking to collaborate with partners who can enhance our future offerings while striving to develop a world-class organization for our stakeholders.”
Is BBIG A Short Squeeze Penny Stock?
With this news has come plenty of interest. What’s more, those looking for penny stocks with high short interest have also turned their attention to BBIG stock. According to Fintel data, the current short float percentage sits around 31.3%.
Short & Short Squeeze Basics
Why are “short squeezes” something traders look for? When someone shorts a stock, they’re betting it will drop. To take advantage of this expected drop, a trader will short the stock by borrowing shares from a broker, selling the shares, then repurchasing the shares at a lower price when the stock drops. The money is made from the ability to repurchase lower than where the borrowed shares were sold.
But if a stock increases in price rather than decreases, the short seller still needs to repurchase shares. In this case, they would take a loss, and their buying activities would add to an already bullish environment, thus potentially amplifying the market momentum. This is where you see short squeezes trigger, and volatile breakouts can ensue.
Remember that just because a stock has a higher short interest, that doesn’t guarantee a squeeze. In fact, it can be a precursor to a much larger move lower. In any case, the first step of finding short squeeze stocks is to identify the metrics and short float percentage is one of them.
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