8 min read
This story originally appeared on PennyStocks
Penny stocks and social media have gone hand-in-hand this year. With the rise in popularity of things like Reddit, Twitter, & even Facebook becoming hubs for investing conversation, retail traders have become more in tune with the speculative nature of the market. Is this a bad thing or a good thing? At the very least, it’s “something.” It has been closely followed by average buyers of penny stocks and even some of Wall Street’s top firms.
A new ETF has even surfaced, which follows popular stocks on social media. Earlier this year, the VanEck Vectors Social Sentiment ETF (NYSE: BUZZ) went live. According to its sponsor, “VanEck Vectors® Social Sentiment ETF seeks to track, as closely as possible, before fees and expenses, the price and yield performance of the BUZZ NextGen AI US Sentiment Leaders Index (BUZZTR).”
The NexGen AI US Sentiment Leaders Index “is intended to track the performance of the 75 large-cap U.S. stocks which exhibit the highest degree of positive investor sentiment and bullish perception based on content aggregated from online sources, including social media, news articles, blog posts and other alternative datasets.”
Here we have Wall Street confirming the use of social media sentiment as a tool for making investment decisions. While this type of strategy isn’t necessarily one that solely leans on social media, it emphasizes that hype can’t be pushed aside. I think the interesting part of it all is that those who’ve been trading penny stocks for a while have already arrived at this conclusion.
Reddit Penny Stocks To Buy On Robinhood
In 2021, Reddit has become one of the outlets of choice for retail traders. Subreddits like r/WallStreetBets, r/PennyStocks, and even r/RedditPennyStocks have grown their userbases. The main point of interest is the overall discussion that members conduct. Sometimes they’re crass; other times, they’re humorous. Overall, there is at least a little bit of insight to gain from certain users.
At the very least, traders can come away with a good gauge of sentiment and use it as part of their overall “thesis,” so to speak. This year, hype has played a large role in market activity. But understanding if the hype is fleeting or if certain companies have more value than hype alone can help determine the longevity of a trade overall.
While there’s a good mix of OTC penny stocks on Reddit, Robinhood stocks – stocks traded on the NYSE and Nasdaq – have recently become a bit more popular. Much of this has to do with so many new traders choosing it as their platform of choice. Since Robinhood restricts access to most OTC companies, you start to see why main listed stocks are becoming more popular. Heading into the weekend, there are several trending penny stocks on Robinhood to watch. Will they be the top names to buy before next week, or should you avoid them entirely?
Robinhood Penny Stocks To Buy Under $5
According to the definition of penny stocks, we’re talking about companies with shares trading below $5. Keep in mind that the cheaper the stock, the higher the volatility can be. A $4 stock that moves 40 cents will see a 10% shift. But when you’re talking about penny stocks under $0.50, that same move can be a huge win or a crushing loss for a trader.
Uxin Limited (NASDAQ: UXIN)
Shares of Uxin Limited climbed higher for the 4th session in a row on April 23rd. There weren’t any new headlines from the company to pair with the move. However, social sentiment has been building behind the company.
The core point of interest is on Uxin’s recent partnership deal with JD.com (NASDAQ: JD). The company’s partnership with JD aims at launching a self-operated online store for used car transactions via JD’s outlet.
Kun Dai, Founder, Chairman and Chief Executive Officer of Uxin, explained, “Leveraging JD.com’s strong e-commerce capabilities and extensive offline network and Uxin’s enriched experience, expertise in the online used car business and proven inventory-owning model, we are confident in our ability to better serve our customers and raise industry standards and service quality levels.”
If you aren’t familiar, JD is one of the largest online outlets in China. It’s a member of the Fortune Global 500 and a major competitor to Alibaba-run Tmall. Uxin said it would use JD’s eCommerce capabilities and offline network to support the online used car business and inventory-owning model. With rising consumer sentiment in digital retail, this could be an interesting move for Uxin, especially ahead of its upcoming earnings report next week.
22nd Century Group, Inc. (NYSE: XXII)
Unless you’ve been away from stock market news recently, you probably have some understanding of what Big Tobacco is facing right now. While pandemic stress smoking increased and sparked speculative bullish momentum behind cigarette manufacturers, recent news from the Biden administration has put out that flame. The Biden administration is considering whether to cap nicotine levels in cigarettes, according to the Wall Street Journal.
Reports recently surface, citing that the goal is reducing nicotine levels to make cigarettes less addictive. Obvious hopes are to attract smokers to quit or switch to other products that are considered “safer.”
Cue the lights on 22nd Century. Not only has it been focusing on this for quite some time, the company actually has and markets a low-nicotine product.
In a well-timed update from the company on April 20th, James A. Mish, chief executive officer of 22nd Century Group explained that “A nicotine cap by the FDA has been in the works since the Obama Administration. During that time, 22nd Century has consistently proven beyond any doubt with our VLN® cigarettes that a cigarette that contains nicotine levels that the FDA has identified as ‘minimally or non-addictive’ is technically feasible.” Mish continued, “Once this rule is in place, we are fully prepared to provide the solution by making our VLN® cigarettes available to adult smokers.”
In the mean time, XXII stock has taken flight. Since April 19th, the penny stock has posted consecutive days of new highs. Furthermore, year-to-date, 22nd Century stock is up over 100%.
SOS Limited (NYSE: SOS)
SOS Ltd. is a big-data company working on marketing and solutions for the cryptocurrency industry. This includes the actual mining of cryptos such as Bitcoin and Ethereum. In addition to its role in the blockchain sector, SOS Ltd. provides everything from cloud computing and AI, to satellite and 5G network services to the emergency services sector.
In the past, SOS has operated as a provider of these products for emergency rescue needs. These services are used across a range of markets, including fin-tech, healthcare, medical institutions, senior living assistance, and others where rescue operations can be enhanced. However, its recent move into the crypto world shows that it is not afraid to innovate and grow.
Earlier in the week, SOS Ltd. announced a purchase agreement for 575 cryptocurrency mining rigs. With these mining rigs, the company should attain a hash rate of roughly 400 GH of ETH. This purchase agreement is another step in the overall cryptocurrency mining strategy that SOS has embarked on.
The CEO of the company, Mr. Yandai Wang, stated that “we are optimistic about the future of cryptocurrencies and Ethereum in particular. This is part of our overall strategy to develop blockchain-based environments and services and which will be a core part of our growth in 2021 and beyond.”
With the recent emphasis on crypto considering the rise of currencies like DogeCoin, companies are fighting to get a share of the market. This has resulted in a worldwide shortage of mining rigs and the components that make them up. Because of its advantageous market position with this purchase agreement, SOS stock could be worth watching.
Penny Stocks & Risk
Don’t forget that penny stocks carry plenty of risk along with their potential reward. If you’re new to the markets and heading directly to Reddit for your first trade idea, make sure you have at least a basic understanding of how to trade penny stocks. Hype is great when stocks are moving strong. But when the hype dies down, you don’t want to be the last one holding the bag if that ends up being the case.