Penny stocks are well-known for their high-risk nature. But lately, things like bitcoin price and cryptocurrency news have gotten wrapped into the fold. In particular, when cryptos like Dogecoin and Ethereum began jumping, traders placed a broader focus on riskier assets.
Where we first saw Reddit act as a catalyst for things like penny stocks, these cheap stocks have now become one piece of a much larger asset class. Now, when you think of high-risk, volatile trading, we’re not just talking about small-cap stocks anymore. Things like China banning crypto and the latest news driving Hertz stock are commonly reported by the same outlet.
For years, mainstream news sources thought of cryptocurrencies as being on the fringes of the investment world. With everyone from Elon Musk to Mark Cuban getting behind this trend, digital assets have become more mainstream. With that has also come a monsoon of new traders looking to gain exposure.
Thanks to apps like Robinhood, TradeStation, and Webull, traders can buy and sell stocks and crypto simultaneously on the same platform. The latest jolt of selling pressure in Bitcoin has lead to the ultimate rise in volatility in higher-risk assets, penny stocks included.Why Is Crypto Down?
Thanks to several major catalysts, cryptocurrency prices have gotten pummeled over the last few days. What began with confusion over an Elon Musk Twitter discussion has evolved. This week China reported that it would bar financial institutions from conducting crypto-related transactions.
Also, let’s not forget that companies that were bullish on things like Bitcoin have started changing their tunes. A JPMorgan report showed that larger investors were selling bitcoin in favor of gold. Meanwhile, Tesla (NASDAQ: TSLA) has already pledged to stop accepting Bitcoin for payment based on environmental concerns stemming from how the cryptocurrency is mined.
Of course, this has lead to several cryptocurrency stocks selling off during the week. Coinbase (NASDAQ: COIN) dropped to fresh lows below $215. Tesla stock slipped under $550 for the first time since March, and former penny stock Marathon Patent Group (NASDAQ: MARA) slid back below $20. Clearly, with Bitcoin news flooding headlines in the stock market today, it could lead to a high-volatility environment for things like penny stocks.Reddit Penny Stocks To Buy [or avoid]
With hype fueling many of these assets (penny stocks & crypto), it begs the question: is it time to buy? The hype has clearly played its role in the epic rise of crypto. As they say, the devil is in the detail. Are the details of the latest crypto crash suggesting it’s time to buy the dip or take a seat on the sideline? Keeping this in mind, here are a few trending penny stocks to watch as the markets try to find their footing.Ambev (NYSE:ABEV)
One of the hottest trending topics in the market right now is the reopening trade. It’s one that we’ve discussed frequently and that analysts have favored in light of new vaccine data. People like Tom Lee of Fundstrat have coined the phrase “epicenter stocks” in relation to the reopening trade. This refers to companies at the epicenter of the pandemic sell-off in 2020, which could recover the quickest upon an economic turnaround.
In this case, companies like Ambev have taken a bit of the spotlight. The alcohol company has benefited from this trend. After reporting Q1 earnings, momentum has continued building in the stock. Rightfully so seeing the significant growth from its results. Net income jumped to $503 million, and revenue soared to over $3 billion. This was up nearly 28%, while earnings per share surged 139.6% to $0.032 (R$0.17). Sales volumes also increase by nearly 12% during the quarter.
“We grew EBITDA by 23.8%, driven by double-digit volume and double-digit net revenue per hectoliter growth in Brazil, CAC and LAS. Consolidated volumes were 5.4% above Q1 ’19, and we were able to get back to flattish EBITDA versus Q1 2019. This was another quarter we saw clear signs that our commercial strategy is working and that momentum continues.”Jean Jereissati
In light of this progress and momentum stemming from the reopening trade, ABEV could be one of the penny stocks to watch right now.Mosys Inc. (NASDAQ: MOSY)
Tech has been one of the underperforming sectors in the stock market this year. However, that doesn’t mean that all tech stocks are dropping. Mosys Inc. has focused on Data Intelligence, providing semiconductor and IP solutions for data access and networking solutions.
This week, the company announced it would add support for optimized P4 pipeline acceleration to its Stellar Packet Classification Platform IP family. According to the company, the solution is expected to be available to early access customers next quarter. What does this mean?
The MoSys Stellar Packet Classification IP is designed to support a wide range of silicon, SmartNICs, and SmartSwitches. MoSys also supports selected Intel and Xilinx FPGA families and products such as Intel® Stratix®10 and Xilinx® UltraScale+™.
Aside from this news, the volatile sentiment in the market could be placing a focus on low float stocks. These are well-known for their potential to see dramatic spikes in price. Given that the overall market is stagnant or declining, MOSY could be on the list of low float penny stocks to watch for the time being. It’s important to understand that with these lower float stocks, they can fall just as quickly as they climb.Precipio Inc. (NASDAQ: PRPO)
Biotech penny stocks are another one of the sporadic trends to follow. Precipio Inc. has been climbing strongly over the last few weeks. The initial catalyst behind this move started with news of the successful launch of a COVID-19 antibody test on Amazon’s platform. Following this, the company launched its new HemeScreen panel for blood cancer testing.
Ilan Danieli, Precipio’s Chief Executive Officer, explained, “These panels will enable POLs to rapidly identify patient disease and provide immediate, and subsequently better care to their patients in addition to having a positive financial and operational impact on their business. We are excited to see the rollout of the AML and future panels to the market.”
What to know right now is that this could be another volatile week for the company. The reason for this is that Precipio is set to release its Q1 earnings results on Thursday afternoon. There’s also going to be a shareholder update given, which could shed some more light on the company’s latest headlines.Penny Stocks & Volatility
Clearly, the mix of tech selling off and cryptocurrency crashing has sparked massive volatility in the stock market today. Keeping this in mind, understand that some of the spikes in certain penny stocks could simply be to capture short-term gains. With that in mind, understand that any big swing higher can be met with a swift drop lower. So if you’re planning on trading penny stocks right now, make sure your strategy aligns with these current conditions.