Almost everyone thinks of Wall Street as a place where anyone can be the star of a rags to riches story. But this belief is especially prevalent on forums like Reddit. Subreddits like /r/wallstreetbets and /r/pennystocks are filled with conjectures about which penny stock might be the next one to “go to the moon.”
Top 10 Reddit Penny Stocks
- XSPA
- FTXP
- BKYI
- GBHL
- FAMI
- CTXR
- ATOS
- XELA
- OTLK
- INFI
What Are Penny Stocks?
Penny stocks are defined as common shares of stock that trade for less than $1 per share. Note, however, that many financial publications, ranging from Insider Monkey to Bloomberg, have a more flexible definition of penny stocks as being under $5 or even $10.
But just focusing on the strictest definition of penny stocks, you might be surprised to learn that there are securities trading for less than a dollar. After all, the stock price of many noteworthy companies is typically pretty steep—at the time of this article, Amazon is trading at more than $3,500 per share. Then there are dozens of other recognizable names trading at $50, $60, $100, $200 per share or more. So, what exactly is worth noting about stocks that aren’t worth more than $1?
As you probably already know, many of the people involved in stock investing do something called day trading, which involves buying stock when the price is low and selling it off when it’s high. While the strategy is usually a bit more complex than that—using options contracts and trading on margin—the overall idea is still buy low, sell high.
That makes penny stocks particularly attractive for two reasons. The first being that if the stock price increases astronomically, then each and every share of stock generates a lot of wealth. Remember that even a company like Amazon started trading $1.40 back in 1997. Imagine if you had invested just $1,000 back then!
The other reason that penny stocks are attractive to swing traders is that they can leverage volume to generate significant profits because the stock price is so low. For instance, they may not have the financial resources to buy and sell 100 shares of Amazon in order to profit off a price swing, but they can probably purchase dozens, hundreds, if not thousands of shares of stock priced at less than one dollar. And if the stock price of said security moves up or down even a little bit, that amount replicated over lots of shares can generate quite a bit of profit.
Where to Buy Penny Stocks
The challenge then, is twofold. One challenge is how to predict what penny stocks are going to do. In most cases, this will be impossible for the average retail trader unless they have some sort of software program to crunch patterns because penny stocks are extremely volatile—oftentimes they are young companies that may be hyped up or in some cutting-edge industry.
The other challenge is where to buy and sell penny stocks. Sometimes a traditional brokerage will not offer retail investors the opportunity to purchase these securities. They may not even be available on some of the newer trading apps either. In these cases, an investor might need to buy and sell penny stocks with the help of a stockbroker.
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Top 10 Reddit Penny Stocks
These are some of the most popular penny stocks that Reddit users are discussing. Reddit traders and their so-called “meme stocks” may not strike you as the likeliest source of sound financial advice. After all, much of the Reddit WallStreetBets forum is dedicated to tongue-in-cheek commentary. But at the same time, seeing what’s hot on Reddit may give you a few clues about which hot penny stocks to look into.
1. XSPA
Xpress Spa Group is a health and wellness company with several subsidiaries operating around the world. Their business operations are mostly limited to providing spa services at airports, such as massages, nail care, and skin care, as well as selling wellness travel products. Recently they have branched out into providing and servicing health screening and testing for COVID, as well as other communicable diseases.
2. FTXP
Foothills Exploration Incorporated is a developing company in the natural gas industry, particularly around the exploration and development of natural gas properties, mostly in the Rocky Mountains. They hold well over 40,000 acres in Utah and Wyoming, although they are based in Los Angeles, California.
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3. BKYI
Biokey International and its subsidiaries develops and markets biometric security solutions, like fingerprint identification, mostly for enterprise clients in government, education, and private commercial sector. These types of security solutions help corporations maintain the integrity of their data, secure their workforce, and foster greater collaboration within their network.
4. GBHL
Global Entertainment Holdings is based in Las Vegas, Nevada, and distributes motion picture content, along with managing engaging social media networks. They are in the funding stage of developing You Got the Part, a platform that allows anyone to upload content of themselves with the hopes that other users will vote them into an actual Hollywood role.
5. FAMI
If you’ve ever wondered if there was a business dedicated to cultivating, marketing, and distributing fungus, look no further than Farmmi. This China-based business offers shitake, Mu Er mushrooms, bamboo fungi, and a whole range of other unique edible (non-psychedelic) fungi for consumers in China, the United States, Japan, Canada, and even Israel.
6. CTXR
Citius is a pharmaceutical company that develops and markets medical products for patients with critical care needs. At the time of this article, they are developing four unique and proprietary products like Mino-Lok (to address catheter related bloodstream infections), Mino-Wrap (a gel product for minimizing infections after reconstructive breast surgery), Halo-Lido (an anti-inflammatory anesthetic for hemorrhoids), and NovaCite (a stem cell treatment for respiratory illness).
7. ATOS
Atossa Therapeutics is a biopharmaceutical company in its developing stages, focusing on oncology and infectious diseases. Their developmental pipeline includes Endoxifen for treating breast cancer and AT-301, a proprietary nasally-administered drug to combat the effects of Covid-19, along with AT-H201 for improving lung functioning of Covid patients. They are headquartered in Seattle, Washington.
8. XELA
Exela Technologies Incorporated is based in Irving, Texas, and provides payment processing solutions and enterprise level information management. The three branches of their business are described as Information & Transaction Processing Solutions, Legal & Loss Prevention Services, and Healthcare Solutions.
9. OTLK
Outlook Therapeutics is a New Jersey biopharmaceutical company researching and developing monoclonal antibodies for eye-related diseases (hence their name). Their product candidates are in the clinical trial phase, with further plans for development and commercialization pending those results.
10. INFI
Infinity Pharmaceuticals incorporated is based in Cambridge, Massachusetts, and focuses on developing novel medicines for cancer patients. Its key candidate right now is IPI-495, an orally administered treatment that inhibits enzyme production to treat breast cancer, ovarian cancer, and solid tumors.
Are Reddit Penny Stocks Worth It?
Reading through the posts on Reddit subthreads infused with Wallstreetbets Slang is likely to make you think that these stocks are exciting and lucrative propositions. And while the forum certainly has its own unique take on investing, the advice won’t always be as lucrative as it was with AMC Entertainment and GameStop Corp.
You may have noticed that many of these securities are biotech penny stocks. The reason for this is twofold: one, these are biotech companies have very little tangible worth, and two, if they do end up producing a wonder drug, their stock prices are expected to soar.
This means, however, that many of these companies are considered a risky investment. Even the most powerful institutional players on Wall Street with the most advanced resources at their disposal have a hard time predicting the future. If you don’t believe that, just remember how much hedge funds lost on Gamestop stock.
Retail traders analyzing the stock market based on memes posted on the internet will have a hard time accurately predicting the future of penny stocks. If you really want to gamble on Reddit stocks, though, consider allocating no more than five percent of your investment portfolio into it, and embrace the likelihood that more often than not, these stocks will probably fizzle.
As a general rule of thumb, securities that are priced under one dollar can be extremely risky and volatile. But once stocks climb into the $5 to $10 range, they exhibit greater stability with more reasonable long term growth potential—whether they’re tech stocks listed on NASDAQ or consumer staples listed on the NYSE. There are even plenty of household name companies trading under $10. Past and current examples of this include RiteAid, SiriusXM, and Nokia.
If you are looking into Reddit penny stocks because you feel that you can’t afford a share of Amazon, think again. Apps like Robinhood will let you buy fractional shares of stocks, so you can invest only what you can afford. Don’t limit yourself to highly unstable securities just because that’s what you think is in your budget.
Penny Stocks Can Be Volatile, So Use Caution When Investing
It can be difficult to analyze the ups and downs of Wall Street and learn how to make money with stocks. Certainly, turning to a Reddit investor as a stock advisor may not seem like the best practice, even if doing so would have helped you see some massive returns on AMC stock and GME stock. Generally speaking, stocks with a very low share price that puts them into the category of penny stocks are pretty volatile, and it’s nearly impossible to predict what the share price will do next.
That’s why, for those who are interested in trading and investing, we’ve created the Weekly Stock Trading Room. This is a place where you can learn low-risk strategies to safely grow your investment portfolio. And If you’re also looking for more extensive mentorship, consider an Infinity Investing membership.
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