Penny stocks are one of the things that keep traders excited. The obvious volatility and potential of these cheap stocks have made their mark. Since the onset of the pandemic, thousands of new traders have come into the stock market. They’ve got a singular goal, which is to capitalize on stocks, options, and futures.
Needless to say, for broader markets, it isn’t all sunshine and rainbows despite the last several weeks of trading action. The S&P500 and its associated SPY ETF surged to near-2023 highs in November. But that has cooled off dramatically as December approaches.
For the last week, the SPY, Nasdaq, and Dow have traded in tight channels. This has given little to no volatility for anyone trading the overall market. That hasn’t been the case for penny stocks, but first, why is the November stock market rally cooling?
The Stock Market Today
The stock market on November 28, 2023, showed signs of caution among investors. This was indicated by the flat opening of major indexes like the S&P 500, Dow Jones, and Nasdaq Composite. This caution stemmed from the speculation of a potential pullback after a significant November rally, which had led to the best monthly performance for stocks in over a year.
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Optimism about peak U.S. interest rates and a strong economy had fueled this rally. However, concerns about economic softness were emerging as market gains stalled. Investors were also focused on upcoming key economic data, including a GDP update and the PCE index, a measure closely monitored by the Federal Reserve. Additionally, a report on consumer confidence was awaited to provide further insights into consumer spending.
The retail sector was under scrutiny, especially following Black Friday and Cyber Monday, with specific attention to online shopping trends. The performance of retail stocks like PDD and Affirm also came to light. In the commodities market, oil prices increased by around 1%, influenced by a weaker dollar and anticipation of production cuts by OPEC+. This scenario reflected a market where previous bullish trends were showing signs of slowing down, leading to a cautious approach by investors.
Penny Stocks To Watch
Despite a lack of volatility in broader market segments, penny stocks are a whole other ball of wax. Even if the stock market is down, trading sideways, or slightly up, chances are there are more than a handful of penny stocks outpacing major indexes daily.
While this is typically not the case over the long term, day-to-day trends show that you can find a few cheap names making big moves. In this article, we look at some of the most active penny stocks today, and recent catalysts, and then you can decide if they deserve a place on your list of penny stocks to watch this week.
- Iris Energy Limited (NASDAQ: IREN)
- Moneyhero Ltd. (NASDAQ: MNY)
- Coeur Mining, Inc. (NYSE: CDE)
- Opendoor (NASDAQ: OPEN)
Iris Energy Limited (IREN)
Iris Energy is a sustainable Bitcoin mining company. They focus on utilizing renewable energy and supporting the global Bitcoin network. While Bitcoin prices slumped over the last 24 hours, IREN stock has bucked this trend. This month the company announced its October 2023 monthly investor update.
The update included a partnership with WEKA to optimize generative AI workloads and an expansion to 9.4 EH/s. Iris Energy acquired 1.4 EH/s of Bitmain S21 miners and continued construction at their Childress site. The update highlighted improved revenue and operating hashrate. However, there was a decrease in Bitcoin mined due to increased network difficulty.
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Given the state of the cryptocurrency arena, IREN stock could be more influenced by sentiment within the sector. Bitcoin prices have rebounded in the stock market today. Meanwhile, the prices for other currencies, including Ethereum, are following the trend. ETH has bounced back toward its 2023 highs this week.
Moneyhero Ltd. (MNY)
Last week we brought attention to MoneyHero Group after a recent IPO flop. It was formerly CompareAsia Group Capital Limited and is a financial products platform in Greater Southeast Asia. The company connects consumers with financial institutions and recently completed its business combination with Bridgetown Holdings Limited, a special-purpose acquisition company. The SPAC is also a blank-check company backed by Hong Kong billionaire Richard Li and PayPal cofounder Peter Thiel.
This merger, approved by Bridgetown shareholders, values MoneyHero at an approximate enterprise value of $310 million and an equity value of around $283 million. Prashant Aggarwal, CEO of MoneyHero, stated that the merger not only provides capital for strategic growth but also strengthens their commitment to simplifying financial decisions.
The partnership aims to enhance MoneyHero’s market position in Greater Southeast Asia, a region experiencing rapid growth. It will also enable continued investment in their financial products platform, serving as a crucial link between consumers and financial institutions.
Higher-profile names combined with penny stock hype have helped fuel speculation in the market.
Coeur Mining, Inc. (CDE)
Coeur Mining, Inc. is a U.S.-based precious metals producer. They own four major mining operations. These include the Palmarejo gold-silver complex in Mexico. It has also popped on news catalysts from earlier in the month.
The company announced an agreement to acquire mining concessions near the Palmarejo Mine from Fresnillo plc. The deal involves a $25 million cash payment and future royalties on discoveries. The concessions span nearly 7,000 acres near Palmarejo’s current operations. They include areas with significant mineralization and historic resources.
This acquisition aims to fill strategic gaps, increasing land holdings by nearly 20% and forming a large, contiguous mining district. The transaction terms include a $10 million upfront payment, with additional payments over two years and royalties on new discoveries. This expansion represents a strategic move to increase resource potential and extend the mine life of Palmarejo.
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This week Coeur presents at the Bank of America Leveraged Finance Conference today. Its leadership will also participate in the Scotiabank Mining Conference on Wednesday.
Opendoor (OPEN)
Opendoor Technologies Inc. specializes in streamlining residential real estate transactions. The company recently reported its financial results for the third quarter of 2023. Despite a significant revenue decrease to $980 million, down 71% from 3Q22 and 50% from 2Q23, the company marked a return to a positive contribution margin.
The quarter saw the sale of 2,687 homes, a decrease from previous quarters. The net loss for the quarter stood at $106 million, an improvement from the $928 million loss in 3Q22. Adjusted net loss was reported at $75 million, better than the previous year’s $328 million. The positive contribution margin of 4.4% reflects operational improvements and cost-saving measures implemented by Opendoor.
A significant drop in revenue and the decreased number of homes sold might be a near-term concern. However, the improvement in net loss and the positive contribution margin might be seen as signs of effective cost management. Whether these factors lead to cautious optimism in the market is to be seen. However, since the earnings release, OPEN stock has been on the rise, trading back above $2.70 for the first time since early October.
Deutsche Bank recently initiated coverage on Opendoor. The firm has a Hold rating. It also set an OPEN stock forecast price target of $2.80, which is nearly the price that shares are trading at this week.
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As an expert and enthusiast, I have access to a vast amount of information and can provide insights on various topics. While I don't have personal experiences or emotions, I can provide factual information and answer questions based on available sources. Now, let's dive into the concepts mentioned in the article you provided.
Penny Stocks
Penny stocks are low-priced stocks that typically trade for less than $5 per share. These stocks are often associated with small companies and can be highly volatile. Due to their low price, penny stocks can offer the potential for significant gains but also carry a higher level of risk. Traders and investors are attracted to penny stocks because of their potential for rapid price movements and the opportunity to make substantial profits. However, it's important to note that penny stocks can be highly speculative and may lack liquidity. [[1]]
Stock Market
The stock market refers to the collection of exchanges and markets where the buying and selling of stocks (shares of ownership in companies) takes place. The stock market provides a platform for companies to raise capital by selling shares to investors. Investors, in turn, can buy and sell these shares, aiming to profit from price fluctuations. The stock market is influenced by various factors, including economic conditions, company performance, investor sentiment, and geopolitical events. Major stock market indexes, such as the S&P 500, Dow Jones Industrial Average (Dow), and Nasdaq Composite, are used to track the overall performance of the market. [[2]]
Volatility
Volatility refers to the degree of variation or fluctuation in the price of a financial instrument, such as stocks, bonds, or commodities, over a specific period. High volatility means that prices can change rapidly and unpredictably, while low volatility indicates more stable price movements. Penny stocks are often associated with higher volatility compared to larger, more established stocks. The volatility of penny stocks can present both opportunities and risks for traders. [[3]]
S&P 500
The S&P 500 is a stock market index that measures the performance of 500 large companies listed on U.S. stock exchanges. It is widely regarded as a benchmark for the overall health and performance of the U.S. stock market. The S&P 500 index is market-capitalization-weighted, meaning that the companies with the largest market capitalizations have a greater impact on the index's value. The performance of the S&P 500 is closely followed by investors, analysts, and financial professionals as an indicator of the broader market trends. [[4]]
Nasdaq
The Nasdaq, short for the National Association of Securities Dealers Automated Quotations, is an electronic marketplace where stocks, options, and other securities are traded. It is the second-largest stock exchange in the world by market capitalization, after the New York Stock Exchange (NYSE). The Nasdaq Composite index tracks the performance of all the stocks listed on the Nasdaq exchange. The Nasdaq is known for its focus on technology and growth-oriented companies. Many technology giants, such as Apple, Microsoft, and Amazon, are listed on the Nasdaq. [[5]]
Dow Jones
The Dow Jones Industrial Average, often referred to as the Dow, is a stock market index that tracks the performance of 30 large, publicly traded companies listed on U.S. stock exchanges. The Dow is price-weighted, meaning that the stocks with higher prices have a greater impact on the index's value. The Dow is one of the oldest and most widely recognized stock market indexes in the world. It is often used as an indicator of the overall health and direction of the U.S. stock market. [[6]]
Retail Sector
The retail sector refers to the segment of the economy that involves the sale of goods or services to consumers for personal use. It encompasses a wide range of businesses, including department stores, supermarkets, specialty stores, e-commerce platforms, and more. The performance of the retail sector is influenced by factors such as consumer spending, economic conditions, and trends in consumer behavior. Retail stocks are often closely watched by investors as they can provide insights into consumer sentiment and overall economic health. [[7]]
Bitcoin
Bitcoin is a decentralized digital currency that was created in 2009 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. It operates on a peer-to-peer network and uses blockchain technology to enable secure and transparent transactions. Bitcoin is the first and most well-known cryptocurrency, and it has gained significant attention and adoption in recent years. Bitcoin mining refers to the process of validating transactions and adding them to the blockchain. It requires powerful computers and consumes a significant amount of energy. Bitcoin prices can be influenced by various factors, including market demand, regulatory developments, and investor sentiment. [[8]]
Ethereum
Ethereum is a decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (DApps). It was proposed by Vitalik Buterin in 2013 and launched in 2015. Ethereum has its native cryptocurrency called Ether (ETH), which is used to facilitate transactions and incentivize participants on the network. Ethereum has gained popularity for its ability to support programmable contracts and the development of decentralized applications across various industries. The price of Ethereum, like other cryptocurrencies, can be influenced by market dynamics and investor sentiment. [[9]]
Please note that the information provided here is based on available sources and should not be considered financial or investment advice. It's always important to conduct thorough research and consult with a qualified financial professional before making any investment decisions.
