Short Squeeze Penny Stocks To Watch Today
A short squeeze is one of the most exciting things to watch in the stock market today. Penny stocks, of course, are a popular topic regarding this type of trend. They’re already volatile, to begin with. Throw in a scenario that amplifies things more; it is a sight to see.
If you’ve been a trader for the last two years, you’ve likely seen what I’m talking about. The most popular are easily AMC Entertainment (NYSE: AMC) and GameStop (NYSE: GME), both of which were penny stocks before their respective moves.
GME and AMC stocks aren’t the only ones to experience massive moves in the market. But they did help create the mold. Now, traders are hunting for new short-squeeze stocks to add to their watch lists. If you’re looking for expert information on short squeezes, there’s no area of the market more prone to demonstrating this phenomenon than penny stocks.
Sure, you’ll get large caps that spike thanks to short covering. But the most significant moves tend to come from the smallest stocks. If you’re new to short squeezes, you might want a little more backstory so let’s set the stage.
What Is A Short Squeeze?
A short squeeze is when a heavily shorted stock or other security experiences a sharp price increase, forcing short sellers to buy shares to cover their positions and avoid potentially unlimited losses. This buying activity can create a self-reinforcing cycle, driving the price of the security even higher and leading to further covering by short sellers.
Short selling is a trading strategy in which an investor borrows shares of a security and sells them on the market, hoping to repurchase them later at a lower price. If the price of the security increases instead, the short seller may be required to buy shares at a higher price to cover their position and limit their losses.
A short squeeze can occur when many short sellers are caught off guard by a sudden price increase and are forced to buy shares to cover their positions, driving the price up further.
A variety of factors can cause a short squeeze. These factors include positive news about the company, a change in market conditions, or speculation and buying activity by other investors. A lack of supply of the security can also trigger it. This is where things like low-float penny stocks become “interesting,” for lack of a better term.
How To Identify Potential Short Squeeze Stocks
There are a few ways to identify stocks that may be prone to a short squeeze:
- Look for stocks with a high short-interest ratio: This ratio compares the number of shares that have been sold short to the number of shares that are available to be traded. A high short-interest ratio can indicate a large number of investors betting against the stock. It could make it more vulnerable to a short squeeze if the stock’s price rises.
- Check for unusual trading activity: A sudden surge in trading volume or a rapid increase in the stock’s price could be a sign that a short squeeze is underway.
- Monitor news and market conditions: Positive news about a company or changes in market conditions can sometimes trigger a short squeeze. Keep an eye on the news and market trends to identify potential catalysts for a short squeeze.
It’s important to note that identifying a potential short squeeze is only one part of the equation. Short squeezes can be highly volatile and unpredictable. Therefore, investing in a stock that is experiencing a short squeeze carries a high level of risk. It’s essential to thoroughly research any investment and carefully consider the potential risks and rewards before making a decision. With that in mind, today, we look at a few more short-float penny stocks to watch. This is a continuation of our list in the article Penny Stocks To Buy Now? 3 Short Squeeze Stocks To Watch.
Penny Stocks To Watch
Heron Therapeutics Inc. (HRTX)
Shares of Heron Therapeutics have come back to levels it hasn’t seen since the summer. At the time, HRTX stock was in focus as the company ramped up into earnings and. large funding round. Heron also announced FDA approval of its APONVIE for preventing postop nausea and vomiting in adults. Since then, however, HRTX stock has steadily declined.
Earlier this month, Heron participated in fireside chats at the Evercore ISI HealthCONX Conference. But not much has been discussed since then. Nevertheless, the company has come back into focus during the second half of December as momentum builds during Friday’s session.
The commercial-stage biotech company develops treatments and a commercial portfolio aiming for a better standard of care for acute care and oncology patients. Looking ahead, plans are to launch its APONVIE next quarter, which could be one of the sources of speculation.
Is HRTX a short-squeeze penny stock? According to data from TDAmeritrade, the short float percentage sits around 23%. Fintel.IO data, however, shows this figure much higher at around 29%.
Transocean Limited (RIG)
This year, energy penny stocks have gained plenty of attention in the stock market. Record prices, recurring supply chain disruptions, and geopolitical catalysts have played a role. Transocean provides offshore contract drilling services for oil and gas wells. The company owns or holds interest in a fleet of 38 drilling units, including 28 ultra-deepwater floaters and ten harsh environment floaters.
One of the more recent catalysts helping bring some attention to the company is $1.04 billion in new contracts. Last week, the company announced the award for two ultra-deepwater drillships with a “national oil company.” Both contracts are anticipated to begin during the second half of next year.
Is RIG a short-squeeze stock? TDAmeritrade and Fintel.IO data show that the short float percentage on Transocean stock is between 18% and 21%.
Blue Apron Holdings (APRN)
We discussed Blue Apron Holdings earlier this week. Shares of the meal kit company have managed to rebound over the last few days. One of the most significant catalysts aiding the move stems from funding from a key investor, Joseph Sandberg, and his affiliates. They have committed to funding a purchase obligation of $55.5 million at $5.65 per share under a private placement agreement.
This comes as Blue Apron has begun slashing its workforce and seeking to cut expenses by $50 million next year. The company also said it “continues to work with its financial advisors to evaluate financing and other alternatives, in addition to being in discussions with its lender.”
APRN stock is no stranger to higher short interest. Today, data from TDAmeritrade shows the short float percentage sitting above 50%. Whether or not that will play a part before 2023 is to be seen.