Short Squeeze Penny Stocks To Watch Today
You’ve got your strategy laid out, you know you want to make money with penny stocks; now what? It might seem as easy as throwing a dart at a dart board at times. But 2022 has been one of the more challenging years to trade like that.
Thanks to the latest November CPI inflation report, optimism has come back to the markets ahead of December’s FOMC meeting. The hope is that this lower inflation number (both CPI and Core CPI) will promote a more dovish tone to rate hikes. That would mean plans for a 50 basis point hike this week and for that lighter tone to continue for the next round of rate increases.
With a more bullish backdrop, some traders are turning toward risk-on strategies. This has stocks with heavy short interest in the spotlight today. This year has been rough for growth stocks, and many have gotten hammered down to penny stock levels.
Short Squeezes Ahead?
Chances are, some of your favorite brands are trading below $5. There are dozens of household stocks to buy for pennies right now. Diving into some finer detail will reveal how heavily shorted many of those companies are. This article looks at a handful of stocks that fit this mold.
Why look at stocks with high short interest? In the event of heavy buying, it could trigger a squeeze, and if you remember stocks like AMC and GME, in cases of extreme short squeezes, it can present significant potential for short-term gains.
While it isn’t guaranteed that high short interest = short squeeze incoming, the first step in finding such stocks is looking at the data. Later in this article, we’ll detail the makeup of shorting and define a short squeeze if you’re new to this type of trend.
Short Squeeze Penny Stocks To Watch
1. PLBY Group Inc. (PLBY)
One of the names on our list of household penny stocks was PLBY Group. In true fashion, the heavy selling pressure throughout the year has promoted a landscape for heavy shorting. The pleasure and leisure company is best known for its rabbit-inspired brand but has become more than just a magazine. The company has tapped many social media influencers and professional entertainers to lead its marketing and growth strategy.
Unfortunately, that hasn’t translated to higher share prices (yet). Recent earnings results from Q3 may also suggest the company is working to turn things around. It beat earnings per share estimates after posting an EPS of $0.47 compared to the expected loss per share of $0.14.Despite missing sales estimates, the management team remains optimistic about the road ahead.
What To Watch With PLBY Stock
“Although our short-term results continued to be impacted by global macroeconomic headwinds, we made solid progress in the third quarter against our long-term goals to build out our consumer products business and enhance the Playboy creator platform…We remain hyper focused on these goals, and I believe we have the right strategy and management team in place to successfully execute our vision for the future of the Company,” said PLBY Group’s Chief Executive Officer Ben Kohn.
Is PLBY a short-squeeze stock? Data from Fintel.IO and TDAmeritrade show that the PLBY stock short float percentage is between 22 and 24%.
2. Grom Social Enterprises (GROM)
Shares of Grom Social Enterprises are back in the spotlight this week. The attention comes after the penny stock dipped to new 52-week lows last week. Grom priced a $5 million offering at a steeper-than-anticipated price of $2.89. Days prior, GROM stock was trading at over $3 per share.
With cash in hand, Grom can now proceed with its strategy, focusing on items outlined last week. These include proceeds from the funding used for marketing and advertising, acquisitions and strategic partnerships, research and development of original content, and technology.
What To Watch With GROM Stock
In the offering prospectus that was posted on December 12th, there were other specifics detailed by Grom Social. These included potential strategic partnerships in the pipeline. According to the company, it continues evaluating strategic acquisition opportunities to help speed growth and “complement our existing business.”
There are various levels of negotiations with three potential strategic partners outlined in that prospectus”
- Active negotiations with a Hollywood director to partner with CIM to direct a feature film with one of our properties.
- Discussion with a Canada-based 20-year-old company to acquire a 30% stake in the full-service animation studio which we believe will provide a strategic advantage for Top Draw Philippines.
- Active negotiations to acquire a stake in a European kid’s entertainment property that has broadcast, buyer, and distribution commitments in various parts of the world.
Is GROM a short-squeeze stock? According to Fintel data, the GROM stock short float percentage is 78.3%.
3. Gossamer Bio (GOSS)
Gossamer may be a new name you haven’t come across if you’re trading penny stocks. That might be because it was trading above $8 per share not long ago. Earlier this month, the company reported topline results from a phase 2 study of its seralutinib in patients with hypertension. Results fell short of expectations and triggered a sell-off in GOSS stock. Even with that as the case, management seems to be upbeat about the prospects thanks to the same data that caused its stock to implode.
“We are very pleased to share that seralutinib significantly improved hemodynamic, biomarker, and right heart structural and functional measures in a heavily treated PAH patient population,” said Faheem Hasnain, Co-Founder, Chairman, and CEO of Gossamer. “Importantly, these efficacy results were paired with a favorable safety and tolerability profile, something that has challenged past development of tyrosine kinase inhibitors in PAH.”
What To Watch With GOSS Stock
GOSS stock has been in rally mode since testing fresh 52-week lows this month. Even in a sea of analyst downgrades and price target cuts, shares have bounced from $1.73 to highs of over $2.30. Another thing that may be in focus is the GOSS short float percentage. According to data from TDAmeritrade and Fintel, it sits between 24% and 28%.
What Are Short Squeeze Stocks?
These are stocks where traders have built higher short positions with an initial plan that share prices will deteriorate. 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 on to return the borrow. Profit is made when the short seller pays less to buy back the shares they borrowed at a lower price.
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.
The critical thing to understand is that short squeezes are typically aggressive but happen quickly. So volatility is usually relatively high.