The Allure and Risks of Penny Stock Trading in 2023
Penny stocks represent an exciting yet risky path to profits for active investors. Defined as stocks priced under $5 per share, these cheap equities boast the potential for astronomical returns on minimal investments. However, penny stocks also carry substantial risks, including extreme volatility, lack of financial data, low liquidity, and susceptibility to fraud.
Why Penny Stocks Captivate Traders
The primary lure of penny stocks is the prospect of reaping significant rewards from a modest initial investment. Even fractional price surges can generate outsized percentage returns thanks to the stocks’ ultralow per-share cost. The affordability of these equities also allows traders to acquire substantial volumes of shares without expending substantial capital. This facilitates portfolio diversification into smaller, lesser-known companies alongside traditional blue-chip stocks.
Strategies for Investing in Penny Stocks
The penny stock sphere demands diligent research and prudent strategies. Before buying penny stocks, educate yourself thoroughly on trading dynamics and regulations. Select a brokerage that specifically accommodates penny stock transactions.
Analyze prospective stocks in depth, evaluating financials, leadership, operations, products, and services. Favor companies with transparency, fundamentals, and positive industry outlooks. Initiate positions gradually, as penny stocks tend to be highly volatile. Monitor invested penny stocks closely.
Hazards to Heed With Penny Stocks
Despite their profit potential, penny stocks carry elevated risks. Prices and valuations tend to fluctuate wildly in reaction to developments, news, and hype. Financial reporting depth lags larger firms, complicating analysis. Illiquidity can hinder selling if trading volumes evaporate. The penny stock environment is also more susceptible to manipulation and schemes like pump-and-dump fraud. Tread cautiously, steering clear of tips or stocks that appear exaggerated.
With prudent strategies, sufficient capital, and tolerance for risk, penny stocks offer a pathway to potential rewards. However, hazards loom, demanding research, vigilance, and disciplined approaches from penny stock traders.
Headwinds That Could Drive Stock Market Volatility
This week could see increased volatility across the stock market. That means the potential for capitalizing on considerable swings in stock prices, which penny stocks are already known for. what’s happening in the stock market this week? The September Fed Meeting and FOMC rate hike decision on Wednesday, September 20, 2023, with a press conference starting at 2:30 pm ET.
September FOMC Meeting Outlook
The Federal Reserve is likely to retain its short-term rates between 5.25% and 5.5% on September 20. While the rate is expected to remain stable, the meeting will shed light on potential hikes for the remainder of 2023. Despite earlier forecasts suggesting a rate increase, recent data and external factors, such as economic disruptions and job market shifts, have introduced uncertainty.
Market analysis indicates a one-third chance of another 2023 hike. Key insights will be drawn from Fed Chair Jerome Powell’s upcoming statements, with the final decisions for 2023 still in flux.
Penny Stocks To Watch
This brings us to today’s list of penny stocks and putting together a watch list for the week. Despite the uncertainty and likelihood of a “no hike” outcome, traders are still speculating on the implications of Fed Chair Powell’s statements at the Fed press conference.
fuboTV Inc. (FUBO)
Last week we discussed how professional sports seasons are getting started once again. That means entertainment stocks could be a fan favorite. fuboTV is an online pay-TV service offering traditional channels without a cable subscription. The company’s platform also offers a level of interactivity as a sports-first outlet. It gives viewers the ability to engage with content they’re watching through features like FanView, which lists stats and scores in real time. It also offers the ability to stream 4 separate channels at once and in 4K HDR resolution.
While the Disney-ESPN news put a damper on things in the stock market last week, shares of FUBO have continued recovering over the last few sessions. fuboTV recently chose Digital Harmonic’s KeyFrame for advanced video pre-encode filtering. It will allow further enhancement of video quality and allow for “significant” bitrate reduction.
FUBO stock is also on the penny stocks to watch list of traders hunting for short squeeze stocks. According to data from TD Ameritrade, the FUBO stock short interest sits around 17%.
BioLine Rx Ltd. (BLRX)
Shares of BioLine Rx have been on fire for the last few months. The company is focused on oncology, particularly a program for supporting therapeutic approaches to oncology and other diseases, motixafortide.
Last quarter the company announced a publication in Nature Medicine of its GENESIS Phase 3 trial. It evaluated motixafortide and G-CSF in stem cell mobilization for multiple myeloma. A New Drug Application (NDA) for motixafortide is currently under review with the FDA, with an assigned PDUFA date of September 9, 2023.
Fast-forward and BioLineRx announced FDA approval of its motixafortide (APHEXDA) combined with filgrastim. “Greater numbers of patients with multiple myeloma are candidates for autologous stem cell therapy; however, achieving target collection goals can be difficult in some patients given modern barriers, including the treatment of older patients and use of contemporary induction regimens,” said John DiPersio, MD, PhD, primary investigator for the GENESIS trial.
This also prompted optimism from the analyst community. This month, HC Wainwright boosted its $19 target to $21. The first also maintains a Buy rating on the penny stock.
MIRA Pharmaceuticals Inc. (MIRA)
Shares of MIRA stock have gone through the typical paces of newly minted public companies. Outside of the ARM IPO, most new issuers have faced more downside from the outset, MIRA Pharmaceuticals included. The synthetic THC development company slipped from IPO highs of $7.98 in August to recent lows of $3 this month. Not even the rally in marijuana stocks helped propel the penny stock.
This week, however, MIRA has seen a rebirth in bullishness following its latest headlines. The company shared data and research from the development of its MIRA1a as an alternative prescription medication.
“Because marijuana often impairs cognition, it can worsen performance in school or at work and make it dangerous to drive,” said MIRA’s Chief Scientific Officer, Dr. Kaplin. “Research and studies have also linked heavy marijuana use in children and adolescents to declines in IQ, and in adults has negative effects on attention, memory, and learning. With one molecular change from THC to Mira1a, we now have an opportunity to have a substantial impact on the future of cannabinoids in healthcare and disease.”
With this news, MIRA stock shot from under $4 to highs of over $6.40 on Monday. As of this article, prices hover around the high $4 range.