Penny stocks, defined as stocks trading under $5 per share, offer investors the allure of exponential growth. As an inherently volatile market sector, penny stocks can rapidly surge on positive news, rumors, and breakthroughs – allowing traders to potentially lock in short-term gains. But without proper research, cheap stocks also carry higher risk potential. This article covers how investors can leverage penny stock-related news and headlines to their possible advantage while avoiding pump-and-dump traps.
Understanding How News Impacts Penny Stocks
With share prices less buffered by assets and revenues compared to large-cap stocks, penny stocks can be exceptionally reactive to the latest news events and headlines floating around them. Positive clinical trial results for a biotech penny stock, accelerated sales growth for a tech microcap, and new ore deposit estimates for a junior mining company – market-moving events like these can trigger a swift rerating of the underlying penny stock’s growth outlook and valuation.
As a result, traders try to anticipate such events and get positioned to ride the momentum. But here also lies the danger for newbies. With low-priced stocks, sensationalist headlines often spread far and fast across social media platforms – regardless of accuracy. When enough momentum gathers behind a storyline or rumor about a penny stock, prices can bolt higher simply from self-fulfilling speculation. But eventually, fundamentals assert themselves. Traders left holding the bag on a false storyline face amplified downside risk.
So while positive headlines and breaking news can bolster the thesis for quality penny stocks to watch with genuine growth prospects, traders must separate hype from reality through due diligence. Understanding this nuance is key to leveraging news flow to your advantage rather than falling prey to “pump and dumps” and false trends.
Scrutinizing Business Fundamentals
Along with closely following headlines tied to a penny stock, traders should dig into financial filings and ownership backgrounds. Does the company demonstrate improving revenues, gross margins, and operating metrics? Or do filings reveal repetitive losses being papered over by debt/dilutive share issuances?
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What holdings do insider executives have in their company’s stock? Is leadership experienced and found qualified? Or marked by red flags like related party self-dealings? Alongside reacting to the latest news events, traders need to assess foundational fundamentals.
Timing Entry and Exit Points
Finally, properly timing trade entry and exit points marks another key skill for trading around news flow. Jumping in during peak market hype often leads speculators to overpay right before an imminent correction. Savvy traders look for moments when sensational headlines pass but leading fundamentals remain unchanged as opportunities to enter positions.
Likewise, paring positions incrementally as positive headlines crescendo limits one’s exposure to sudden downswings once momentum stalls. Traders able to capitalize on news events while mitigating downside risk stand to reap substantial short-term gains in penny stocks – albeit with ample risk management required.
Today we have a closer look at 5 penny stocks with recent developments and corporate events driving momentum on Black Friday in the stock market.
Penny Stocks To Watch
FLJ Group (FLJ)
FLJ Group Limited has begun expanding its portfolio through strategic acquisitions. That is one of the main reasons for the uptick in attention in the stock market on Black Friday. The company announced its acquisition of Alpha Mind Technology Limited for $180 million. Alpha Mind will become a wholly-owned subsidiary of FLJ post-acquisition. The deal involves FLJ issuing promissory notes to Alpha Mind’s shareholders, maturing 90 days after closing.
Alpha Mind operates in two main sectors: an insurance agency and an insurance technology business. The agency offers a range of insurance products in China, partnering with about 180 carriers. The technology arm focuses on developing insurance technology products, including SaaS platforms.
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They also implement AI in the insurance space. In 2021 and 2022, Alpha Mind’s revenue was $44.9 million and $47.4 million, respectively. FLJ’s CEO expressed optimism about Alpha Mind’s services and the potential to strengthen its market position. The important thing to note is that FLJ has a history of big pops and drops so if it’s on your list of penny stocks to watch, keep that in mind.
FLJ Forecast News Speculation
Bullish Case: FLJ’s expansion into insurance technology could open new revenue and market opportunities.
Bearish Case: The acquisition comes with risks, including the integration of Alpha Mind and the realization of anticipated synergies.
Balanced Case: Investors should weigh the growth potential of the insurance tech sector against the operational and financial risks of the acquisition.
Faraday Future Intelligent Electric Inc. (FFIE)
Faraday Future Intelligent Electric Inc. is an electric mobility company. They focus on intelligent electric vehicles and shared mobility solutions. Once again stock market news is boosting sentiment in the market on Black Friday.
A strategic entry into the Middle East market is one of the latest catalysts. This includes cooperation agreements with Master Investment Group and Siraj Holding LLC. They plan to launch the FF 91 2.0 Futurist aiFalcon, a limited-edition model tailored for the Middle East. Delivery is targeted for 2024. The announcement was made at a press event in Abu Dhabi, UAE.
The FF 91 2.0 Futurist Alliance, the North American model, was showcased at the Abu Dhabi Yas Marina Circuit during the F1 Grand Prix week. The company delivered its first FF 91 2.0 Futurist Alliance in the U.S. in August 2023. Faraday Future emphasizes its Co-Creation initiative, placing users at the center of its operations. This strategic approach is expected to enhance its competitive edge in the evolving EV market.
FFIE Forecast News Speculation
Bullish Case: The Middle East expansion and introduction of a new vehicle model could open market opportunities for Faraday Future.
Bearish Case: Potential challenges in new market penetration and execution risks could impact the company’s performance.
Balanced Case: While the Middle East expansion offers growth potential, those looking at FFIE stock could consider the operational and market risks associated with such strategic moves.
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Ondas Holdings Inc. (ONDS)
Ondas Holdings Inc. provides private industrial wireless networks and commercial drone and automated data solutions. They focus on developing and delivering mission-critical solutions to improve safety and efficiency. In addition to insider trading, ONDS stock has gained attention following its earnings update.
It reported its financial and operational results for the third quarter of 2023, highlighting significant achievements. The company achieved $10.7 million in year-to-date revenues, keeping it on track to meet its $15 million revenue target for 2023.
A 60% quarter-over-quarter growth in Ondas Networks revenue was driven by a record delivery of product shipments to Siemens, totaling $2.4 million. Ondas Autonomous Systems (OAS) also secured a substantial order worth $2.6 million for fleet expansion in Dubai, reflecting increased demand in the security and public safety markets.
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So which insiders are buying shares of ONDS stock in November? One of the company’s 10% holders, Joseph Popolo, is scooping up hundreds of thousands of shares. In total, for the month of November, he has purchased more than 1.03 million shares.
3D Systems. (DDD)
3D Systems specializes in 3D printing technologies. They focus on healthcare and industrial markets, including dental solutions. Earlier this month, the company announced FDA clearance for NextDent Base. It’s a material for 3D printing denture bases. This material has high break resistance and precision. It’s comparable to conventional denture materials, offering durable, impact-resistant dentures.
Available in four colors, it matches popular gingiva shades. This development is part of 3D Systems’ broader digital dental workflow, enhancing speed, productivity, and efficiency in dental prosthodontics production. The global 3D Printed Dentures market is growing rapidly, estimated to reach over $2 billion by 2028 according to the company. NextDent Base joins 3D Systems’ extensive portfolio of 30 unique NextDent resins, the largest from any dental 3D printing material supplier.
But it’s more than news sparking attention in the stock market today. Insider trading is contributing to the speculative bump in action. Company director Thomas Erickson reported purchasing 50,000 shares in November. He paid for DDD stock at prices ranging from $4.6417 to $4.6732.
Assembly Biosciences, Inc. (ASMB)
Assembly Biosciences develops antiviral therapeutics for serious viral diseases. This month, it presented new data at the AASLD Liver Meeting. The data included the preclinical IFNAR agonist program in lead optimization and showed potential for treating serious viral diseases.
One poster highlighted small molecule IFNAR agonists inhibiting HBV and HCV. These molecules mimic interferon alpha, inducing cytokine secretion and IFN-stimulated genes. Another presentation discussed Phase 2 data of vebicorvir in chronic Hepatitis B. The study did not show significant improvements with vebicorvir. Assembly Biosciences discontinued vebicorvir’s development in 2022.
Like ONDS and DDD stock, ASMB has gained some attention from insider trading. One of the company’s 10% owners, Alexander Schornstein, picked up 400,000 shares of ASMB stock. The trades came on November 20 and 21 at prices ranging from $0.6666 to $0.72 and brought his total direct holdings to more than 7.5 million shares.
List Of Penny Stocks
- FLJ Group (NASDAQ: FLJ)
- Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE)
- Ondas Holdings Inc. (NASDAQ: ONDS)
- 3D Systems. (NYSE: DDD)
- Assembly Biosciences, Inc. (NASDAQ: ASMB)
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