Penny stocks often represent an intriguing opportunity for investors. Defined by the U.S. Securities and Exchange Commission as shares trading for less than $5, these stocks generally belong to small companies that may not yet have made their mark in the mainstream market. Despite their low price, penny stocks hold the potential for significant returns, making them an attractive proposition for risk-tolerant investors.
Their inexpensive prices mean that even small changes can translate into large percentage gains or losses. For instance, a $0.50 increase on a $1 stock equates to a 50% return. This potential for rapid and substantial gains is part of the allure of penny stocks.
However, the flip side of this potential is a high level of risk. Penny stocks can be subject to price manipulation and lack the liquidity of larger, more established stocks. Furthermore, information about these types of companies can be scarce. That means that it can be more challenging for investors to conduct thorough due diligence.
Stock Market Events and Penny Stocks
Stock market events can have a significant impact on specific penny stocks. Economic indicators, changes in industry trends, and shifts in investor sentiment can all trigger dramatic movements in the price of penny stocks.
For instance, a positive economic report could boost investor confidence and lead to increased demand for stocks, including penny stocks. Conversely, an unexpected market downturn could trigger a sell-off. As such, staying updated on market events is important for anyone venturing into the world of penny stocks.
Company news also plays a role. News of a new product launch, a strategic partnership, or a regulatory approval can lead to a surge in a penny stock’s price. On the other hand, negative news, such as disappointing earnings or the loss of a major customer, can trigger a sharp decline. Therefore, keeping a close eye on company news can provide valuable insights and help investors identify potential opportunities in the stock market.
Speculation and Penny Stocks: A Double-Edged Sword
Speculation is another factor that can influence the price of penny stocks. Due to their low price and high volatility, penny stocks can be subject to speculative trading. While this can lead to rapid price increases, it can also result in equally rapid declines. Therefore, while speculation can present opportunities for short-term gains, it also adds to the risk of investing in penny stocks. In this article, we look at a handful of penny stocks to watch after recent attention has grown from retail traders this week.
Windtree Therapeutics Inc. (WINT)
Shares of cardiovascular biotechnology company Windtree caught a surge of trading action late in the Monday session. WINT stock shot to highs of $1.65 on the back of news of an upcoming R&D and Investor Day update. Windtree hosts its virtual Investor Day on June 14th. It will feature its lead drug candidate, istaroxime, for treating cardiogenic shock and acute decompensated heart failure.
Leading up to this event, the market has responded in favor. Windtree has focused on cost reduction in order to advance its istaroxime platform. In its first quarter business update, CEO Craig Fraser explained, “We plan to leverage the cost savings and successful financing to build on the positive Phase 2 data for istaroxime with significant development activity to deliver meaningful milestones over the next several quarters. We look forward to planned events and communication to keep our shareholders and the market updated on our progress with istaroxime and potential opportunities with the next generation SERCA2a activators.”
Abeona Therapeutics (ABEO)
Abeona is another one of the companies with upcoming events to keep track of. The company is developing cell and gene therapies for myriad diseases. Its lead program, EB-101, is being investigated in dystrophic epidermolysis bullosa.
The company will present at the Jefferies Healthcare Conference later this week. CEO Vish Seshadri will participate in a fireside chat and participate in one-on-one investor meetings at the conference. Something that may be something of additional interest is what was stated in an update last month by Brian Kevany, Ph.D., Chief Technical Officer and Head of Research at Abeona. He said, “We look forward to pre-Investigational New Drug Application meetings with the FDA for two of our programs to take place in the second quarter of 2023.”
With several pending and potential catalysts, ABEO stock has been on the watch list for some in the stock market this week.
Ardelyx Inc. (ARDX)
Ardelyx has been on fire for most of the year until a recent bout of selling pressure took shares back into penny stock range. It reported an FDA committee backed its kidney disease drug candidate and recommended its approval. The FDA also granted Ardelyx an appeal for its treatment candidate, Xphozah, and a Complete Response letter for a New Drug Application.
A mix of solid performance from these milestones may have also led to a bullish outlook from analysts. Wedbush, for example, upgraded the penny stock to Outperform and raised its price target to $6. While recent earnings results and the accompanying business update helped bring more upward momentum for the stock, there’s something that could be stoking speculation.
Ardelyx announced last month that the FDA accepted its resubmission of a New Drug Application for XPHOZAH, which helped give ARDX stock a lift. Needless to say, an upcoming presentation at the Jefferies Healthcare Conference this week and a current push to raise the company’s common share count have breathed some new life back into the market.
In response to the latter, Mike Raab, president and chief executive officer of Ardelyx, explained this week, “While we do not currently have any plans for these additional shares, the Ardelyx Board of Directors believes that additional authorized shares of common stock would give the Company the necessary flexibility to issue shares for various corporate purposes, including, in particular, capital-raising or financing transactions, and enable the Company to take timely advantage of market conditions and opportunities.”