Short Squeeze Penny Stocks to Watch Before Next Week
There’s no shortage of volatility in the stock market today. Penny stocks are some of the assets that demonstrate this phenomenon. Today we’ll talk about a few more companies that have seen more significant bearish bets placed on them. One of the reasons that traders look for such data is that they hope to catch a short squeeze. We discussed this trend earlier in the week and will continue that list of penny stocks from the article 4 Short Squeeze Stocks To Watch Now.
What’s so special about short-squeeze stocks? For one, they have a history of massive breakouts in short periods. You probably know what I mean if you are familiar with companies like AMC Entertainment (NYSE: AMC) or GameStop (NYSE: GME). Both have experienced some of the most dramatic short squeezes in recent history. They have also become the poster children of meme stocks and the Ape community.
What Are Short Squeeze Stocks?
Short squeeze stocks are stocks in which traders have built higher short positions and have an initial expectation that share prices will deteriorate.
How To Make Money Shorting Stocks
If they’re right, they make money when stocks go down. They do so by borrowing shares of stocks, selling them into the market, and then repurchasing them at a lower price later to return the borrow. Profit is made when the short seller pays less to buy back the shares they borrowed at a lower price.
How To Lose Money Shorting Stocks
If they’re wrong about their trade idea and prices increase, they still need to return their borrow. Instead, they’ll lose money if they have to repurchase shares at higher prices than they initially sold them for. When the “squeeze” gets triggered, this mix of short covering and higher-than-average buying creates a snowball effect in the market, and we see more significant moves.
Understand that short squeezes are typically aggressive but happen quickly. So volatility is usually relatively high. Today we look at a few penny stocks with higher short interest. Will they squeeze? That’s yet to be seen, but the first step in putting together a list of penny stocks that fit these criteria is to identify stocks with higher short interest.
Short Squeeze Penny Stocks To Watch
NeuroBo Pharmaceuticals, Inc. (NRBO)
Shares of NeuroBo Pharmaceuticals have steadily bounced back from the 52-week lows it hit late last month. One of the latest catalysts that have helped is the company’s filings, believe it or not. The Goldman Sachs Group filed a Form 3 in November, which showed a stake of over 1.2 million shares of NRBO stock. That filing came shortly after Altium Capital reported a 7.7% stake in NeuroBo earlier in the month.
The clinical-stage biotech company is focusing on treating cardiometabolic diseases. NeuroBo has obtained an exclusive license to develop and commercialize DA-1241 and DA-1726, which are currently being evaluated for the treatment of nonalcoholic steatohepatitis (NASH), obesity, and type 2 diabetes. Under the agreement, the company is responsible for global development, regulatory and commercial activities other than for specific Asian-Pacific geographies.
Is NRBO one of the short-squeeze penny stocks to watch? Not only is NRBO stock one of the lower float names on this list, but according to data from outlets like Fintel and TDAmeritrade, it has amassed some more substantial short interest. The figure sits between 26% and 27% as of this article.
8X8 Inc. (EGHT)
We discussed 8X8 in November as analysts grew bullish on the penny stock. Share prices sat around $4.30 and have since climbed above the $4.70 area. The cloud communications technology company had just reported strong earnings results with an increase of 24% in revenue, year-over-year, to over $187 million. Furthermore, guidance showed that 8X8 expects to continue this trend through the end of its fiscal year ending in March. Revenue growth is anticipated to increase by 18% in the range of $745 million to $755 million.
Most recently, the company has cleaned house. Last week it named an interim CEO and a CFO to kick-start its leadership shakeup. Responding to the motion, Jaswinder Pal Singh, Chairman of the Board, said, “8×8 remains committed to delivering long-term value to our stockholders. We have confidence in Sam’s [the new CEO] leadership and will work closely with him and the management team to ensure that this change is seamless for our customers, partners, employees, and stockholders.”
Next week 8X8 will be at the Barclays Global Technology, Media, and Telecommunications Conference. So that could be something to keep in mind if EGHT is on your watch list. Other than that, short interest has picked up a bit. According to Fintel.IO, the short float percentage is nearly 19% as of this article.
Workhorse Group Inc. (WKHS)
EV company Workhorse Group is no stranger to heavy short interest and volatility. Overall it’s down on the year. But that hasn’t stopped day traders from flocking to the name at certain technical levels. The latest move within the past week has seen share once from 52-week lows of $2.07 to over $2.30.
There haven’t been many new headlines from the company, but a recent Patent grant titled “Flying Vehicle Systems And Methods” has raised some eyebrows despite not being officially announced in a company PR since the Patent (#11498701) was published.
The patent describes some of the specifics:
An unmanned aerial vehicle according to certain embodiments generally includes a chassis, a power supply mounted to the chassis, a control system operable to receive power from the power supply, at least one rotor operable to generate lift under control of the control system, a line having one end coupled to the chassis and an opposite free end, wherein the free end is positioned below the chassis, and a severing mechanism operable to sever the line under control of the control system.
Considering Workhorse hosts its analyst day next week on December 7th, it will be interesting to see if it becomes a topic of conversation. Ahead of the event, we see that short interest is also a topic of discussion. TDAmeritrade and Fintel data show this between 24% and 25.9% as of this article.