If you’re looking for penny stocks to buy now, chances are, you’re trying to find pockets of volatility. I’ll admit that there are plenty of these so-called “pockets” to choose from. But one of the most notable areas is the one that includes “short squeeze stocks” or, rather, stocks with higher short interest. Historically, these can experience significant levels of price fluctuation, and if you’re familiar with the story of AMC Entertainment or Gamestop, you know what I mean.
While those are extreme examples, there are other penny stocks that ultimately short squeeze not for thousands of percentage points but hundreds or percentage points aren’t out of the question. These breakouts also typically result in breakdown later on, where the drops can come just as quickly. In any case, the risk lies within these short-squeeze stocks.
If you have a hunger for this type of price movement, then the first place you’re going to begin is a watch list. Putting together a list of penny stocks with high short interest is helpful no matter your experience level. With countless cheap stocks exploding daily, narrowing your focus – especially with short-interest stocks – is helpful.
In this article, we do just that. We look at a handful of stocks with higher short interest to see what’s going on and what could be on the horizon. Considering that the stock market is chopping around today, there’s a chance most retail traders, at least, are hunting down ways to capitalize on the market’s volatility.
Short Squeeze Penny Stocks To Watch
iBio Inc. (IBIO)
The company had a rough ending to the year in 2022 after falling to fresh 52-week lows shortly before the New year. One of the contributing factors was iBio stating it had “substantial doubt” that it could continue as a going concern about its preliminary Fiscal 2022 earnings update.
Since then, however, IBIO stock has continued to rebound steadily, and several new milestones place it on some traders’ watch list this month. iBio has zeroed in on its latest immune-oncology target, MUC16. It is a large extracellular protein expressed on more than 80% of ovarian tumors, iBio said. According to iBio Interim CEO Martin Brenner in a February update, “The targeting of a very specific, patho-physiologically relevant, region of MUC16 is a testament to the versatility of our AI technology, as it successfully shows it can be applied to a broad range of target.”
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With those headlines in the rearview, the market is looking ahead to see what’s next for iBio. Some have focused on the IBIO stock short interest, for example. According to data from Fintel, this figure sits at around 11.08%. Other sources, including TD Ameritrade, show this figure closer to 11.3%.
Esperion Therapeutics Inc. (ESPR)
Another one of the biotech penny stocks to watch with higher short interest is Esperion Therapeutics. The company specializes in drug development for patients with cardiovascular and cardiometabolic diseases. Confusion and uncertainty surrounding milestone payments from its partner Daiichi Sankyo Europe initially led to the drop in price a few weeks ago.
Daiichi said that Esperion is not entitled to receive payments based on CLEAR outcomes data in the trial of bempedoic acid for treating cholesterol. Esperion noted earlier this year that its Nexletol candidate reduced the risk of heart attack and other heart issues in people who can’t take statins. In a securities filing, the company outlined how the milestone payment is tied to whether cardiovascular risk reduction data is included in the European label for the pill. Daiichi argued that the potential payment is connected to the primary endpoint. Esperion said it plans to submit for regulatory approval in the U.S. and Europe in the first half of this year.
While the market awaits an outcome, Esperion continues building its cash position. It recently closed a $56.7 million funding round. Whether related or unrelated, the stock market has had more positive sentiment lately. There is also some attention on the ESPR stock short interest. Fintel shows this figure sitting around 28%.
BigBear AI Holdings (BBAI)
AI penny stocks have gained plenty of attention this year thanks to breakthroughs in technology from companies like OpenAi. BigBear AI Holdings has become a poster child for AI stocks under $5, and the chart shows the volatility trend clearly. BBAI stock exploded from under $ to over $6 during the first half of the quarter and at the height of AI excitement. With the stock market as a whole cooling off, so has the hype around high-growth stocks.
However, the last week has been a different case for companies like BigBear. Shares have steadily climbed higher as tech stocks recover. Besides beating sales estimates in its latest quarter, Bigbear has focused on narrowing costs. CFO Julie Peffer echoed this sentiment and discussed how the company anticipates a “substantially lower cash burn” and utilizes a $25 million financing from earlier this year to allow the company to target “growth investments judiciously.”
Now the focus may be on BBAI stock and its short interest. According to data from TD Ameritrade, the short float percentage sits at around 18.87%.
What Is Shorting & How Can You Capitalize On A Short Squeeze?
Shorting stocks in the stock market is when investors bet against a company by borrowing shares from a broker and selling them on the market. The goal is to repurchase the shares at a lower price to return the shares to the broker while pocketing the difference for a profit.
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A short squeeze is when investors who have shorted a stock are forced to buy shares to cover their positions. This often occurs due to unexpected positive news or speculation about the company. As a result, this buying activity can cause a rapid increase in the stock’s price, leading to a feedback loop that further pressures short sellers.
Investors who have bought shares in the company before the short squeeze can profit from the rise in price. Additionally, investors who recognize companies with high short interest and anticipate positive news or a shift in market sentiment that may cause a short squeeze can position themselves to potentially benefit from the situation.
Nevertheless, short squeezes can be volatile and unpredictable, making them high-risk and high-reward investment strategies. The initial step in building a short squeeze penny stocks watchlist is identifying companies with high short interest. This article examines several inexpensive stocks with this characteristic.
List Of Penny Stocks
- iBio Inc. (NYSEAMERICAN: IBIO)
- Esperion Therapeutics Inc. (NASDAQ: ESPR)
- BigBear AI Holdings (NYSE: BBAI)