Penny stocks can be a great way to make money, but they are also high-risk investments that can easily lead to significant losses. In order to be successful with penny stocks, it is important to be well-informed, disciplined, and patient.
Today’s article looks at a few penny stocks with higher short interest. One of the reasons these types of stocks have grown in popularity, among traders specifically, is the potential for aggressive, short-term moves in the market.
Once you see the recent stock market events and analyze the short data, you can decide if any are worth adding to your watch list or if they should be avoided altogether. At the end of this article, we’ll also discuss five specific ways to make money with penny stocks.
Short Squeeze Penny Stocks To Buy [Or Avoid?]
Ginkgo Bioworks Holdings Inc (DNA)
One of the “Cathie Wood stocks” trading below $5 is Ginkgo Bioworks. The company also made its public debut via a high-profile SPAC merger. Wood’s Ark Investment Management, Bain Capital’s public equity arm, and even Bill Gates’ private investment arm Cascade Investment participated in the private placement led by Baillie Gifford, Putnam Investments, and Morgan Stanley’s Counterpoint Global arm. This PIPE helped DNA stock in the final stretch of gaining public status. It would ultimately merge with Soaring Eagle Acquisition Corp. It was a blank-check company led by former MGM CEO Harry Sloan.
But like many SPACs, DNA stock had to go through a significant sell-off period first. This has taken the stock as low as $1.45, which it hit at the start of the year. Nevertheless, its penny stock status has recently attracted more of a retail audience than anything. News of its preliminary revenue guidance seems to have raised eyebrows in the stock market this week. Shares of DNA stock rose to highs of nearly $2 by Friday.
In an update, Jason Kelly, Ginkgo’s co-founder and Chief Executive Officer, explained that “we ended the year with about $1.3 billion in cash, providing a margin of safety to the business as we continue to scale. The meaningful improvement in our platform’s capabilities through investments, acquisitions, and scaling has enabled this growth, with notable traction in the biopharma vertical.”
With a bit more optimism from management, traders took to the short data for any clues on volatility. According to Fintel.IO, DNA stock’s short float sits at 15.47%.
Sana Biotechnology, Inc. (SANA)
Shares of Sana Biotechnology have remained in their recent uptrend that began shortly after hitting 52-week lows late last month. The biotech company’s stock price dipped to lows of $3.15 right before the New Year, which capped off a relatively lackluster performance for the 4th quarter. Now, in January, SANA stock has pulled an about-face (for now) that has seen its share prices rise back above the $4.70 mark at the end of this week.
The company creates and delivers engineered cells as medicines. If there’s something that has grown in popularity among traders, it is companies capable of cell editing or cell creation. Sana aims at controlling genes and replacing missing or damaged cells to tailor medicines to groups of patients. Last month Sana outlined its key program timelines and prioritization for its portfolio.
In particular, its SC291, SC263, and SG295 CAR-T platforms are expected to have Investigational New Drug applications filed this year. Meanwhile, other platforms, including its SC379 and SG418 for other indications, are anticipated to either begin toxicology studies or preclinical proof-of-concepts initiatives in 2023. There are different platforms expected to file INDs next year as well. This week Sana presented an overview and update at the JP Morgan Healthcare Conference.
What does the SANA short float data look like? According to Fintel, the figure sits around 28.5%.
PLBY Group Inc. (PLBY)
Pleasure and leisure company PLBY Group has underperformed the market’s expectations since making its public debut. Late last year, when PLBY stock was still over $5, we wrote the article: Will PLBY Group, Inc. (PLBY) Be On Your List Of Penny Stocks In 2022? We highlighted several hot topics of pessimistic sentiment, ultimately contributing to the shortfall of longs in the stock. These included bearish sentiment from Wall Street analysts.
However, now that it’s on a list of penny stocks, things are a bit different regarding who’s looking at PLBY stock. The daily volatility has brought a bit more action, mainly followed by retail traders. In addition, recent initiatives, including a Playboy Spirits JV, have helped bring some attention to the company. Earlier this week, the company announced the JV and outlined the initial plan for Playboy Spirits. The company and XL Ventures II LLC share 40% and 60% ownership, respectively, in the new spirits venture.
Marc Bushala, Chief Executive Officer of XLV, SIP, and Playboy Spirits, added, “It has been amazing to develop Rare Hare in partnership with a global brand like Playboy. For the past several years, SIP has discreetly procured unique and rare spirits from around the world to offer in limited releases under the Rare Hare brand.”
What’s up with the PLBY stock short interest? According to data from Fintel and TDAmeritrade, that figure is between 20% and 23%.
Aytu Biopharma Inc. (AYTU)
Reverse split stocks have also become a hot topic among retail traders in the stock market this year. Due to listing requirements, companies must meet a minimum price requirement. If they don’t meet that mark by a predetermined time given by the exchange, they face delisting. One way to regain compliance is to do enough for the market to want to value the stock price at those higher prices (typically $1). Another way is to do a reverse stock split. The price per share increases as a result, but the theoretical value per share doesn’t change. That is, of course, unless the post-reverse price drops or rises.
The outstanding shares and, in turn, the public float also gets reduced for a period after the reverse is effective. I say “for a period” because once new shares are registered (IE, old financing or conversions), the float increase again. Put a button on that topic for a later date. For now, AYTU stock, a post-reverse penny stock, recently began trading at its higher share price.
Aytu Biopharma also reported that its Adzenys XR-ODT, a bioequivalent to Adderall XR, which is in short supply, is available as a potential treatment option. In the accompanying press release earlier this week, the company cited a Psychiatric-Mental Health Nurse Practitioner, Joe Gagnon, who said, “Adzenys XR-ODT has proven not only to be a sufficient replacement for my patients, many intend to continue to take it even after the shortage ends.”
Whether or not AYTU stock returns to its lower prices is to be seen. However, the current state of the market may have traders looking at the penny stock’s short float percentage. According to the most recently available data from Fintel and TDAmeritrade, as of this article, the short float for AYTU stock sits between 106.11% (Fintel) and 117.55% (TDAmeritrade).