Traders are currently showing interest in penny stocks, with Keith Gill, also known as Roaring Kitty, making a return on social media. Gill’s tweet featuring a man holding a video game controller sparked a 74% increase in GameStop (GME) stock on Monday. This momentum extended to other meme stocks like AMC Entertainment (AMC) and Koss (KOSS) as well.
The excitement surrounding meme and penny stocks prompted short sellers to reduce their exposure to these volatile securities. While it may be tempting to trade these stocks for quick gains, not all heavily shorted companies are good bets. Here are three penny stocks that are still risky investments despite the recent rally:
1. Tupperware Brands (TUP): TUP stock surged 36% without any company-specific news to support the increase. However, Tupperware’s financial outlook remains uncertain, with the company struggling to stay afloat due to its challenged balance sheet and significant operating losses.
2. Virgin Galactic (SPCE): Despite the initial excitement surrounding space tourism, Virgin Galactic has faced setbacks, including underwhelming demand for its flights and legal issues with partner Boeing. With substantial debt and a lack of revenues, SPCE is a risky penny stock to sell.
3. ChargePoint Holdings (CHPT): CHPT aims to revolutionize the electric vehicle landscape but has faced challenges in achieving profitability. The company’s recent earnings results were disappointing, raising doubts about its future success. While CHPT stock saw a 12% jump, there are no significant reasons behind the surge, making it a penny stock to sell now.
It’s important to be cautious when trading penny stocks, as they can be volatile and risky investments. Investors should carefully assess the financial health and prospects of these companies before making any decisions.