Stocks to buy

The Short List: 3 Meme Stock Battlegrounds to Keep on Your Radar

Big GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) may have lost investor focus, but these meme stocks keep interests high.

Of the many indicators aiding to time the market, short interest remains the most popular. Shorting stocks, especially meme stocks, means that traders expect profits from borrowing, selling, and repurchasing them later at a discount. 

The percentage of float shorted gives traders a clue as to how many shares are in that transitory stage before repurchasing when they have to cover their bets. If high enough, above 20%, it points to market sentiment that these shares will decline in value for various reasons.

This could present a buy on the weakness opportunity for companies with strong fundamentals or implementing stop-loss orders to cut losses. 

Here are three meme stocks that presently have high float shorted percentages.

Imperial Petroleum Inc. (IMPP)

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Imperial Petroleum (NASDAQ:IMPP), a Greek-based oil tanker company, finds itself at the crossroads of global oil supply dynamics, deeply influenced by geopolitics. Specializing in the transport of petrochemical products, the company has increased its shipping capacity by 150% since Q2 2021, positioning itself as a significant player in the industry. Modern civilization runs on petroleum, which renders it liquid gold.

On Sunday, Saudi Arabia, Russia and other OPEC+ nations extended crude oil supply cuts into Q2.

Over the last 12 months, the price of Brent crude has remained relatively flat at -1.3%, at $83.11 per barrel. When the OPEC+ decided in November, the market feared rising oil prices that would heighten inflation. As this failed to materialize, investors took this as a sign that some oil companies were overvalued, given their reliance on oil profits.

The Greek company has been the target of such speculation, with IMPP shares having gone up 85% in the last three months. Compared to much larger International Seaways (NASDAQ:INSW), this represents over 5x outperformance. 

As a small oil tanker company offering volatile penny stocks, Imperial Petroleum took advantage and diluted the stock on multiple occasions during the period to reinvest and expand. This brought its net asset value (NAV) per share to $1.86, at a 35% premium to NAV. It is now a matter of time when IMPP meme stock corrects further downward, after falling -10% over the last month, bringing it in line with its competitors.

Novavax (NVAX)

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Novavax (NASDAQ:NVAX), a key player in the pharmaceutical industry, has encountered significant challenges following the initial surge in demand for COVID-19 vaccines. This applies more so to novel vaccines for respiratory infections. In February, the CDC reported only 10.8% of people are interested in updated COVID-19 boosters.

As a part of the Operation Warp Speed, Novavax completely deflated, much like Pfizer (NYSE:PFE) and BioNTech SE (NASDAQ:BNTX). From the ballooned height of $290 per share in February 2021, NVAX stock is now in the penny range of $5.39.

In the latest Q4 2023 earnings delivered on Feb. 28th, Novavax reported a $178 million net loss. Excluding the small bump of $58 million in Q2, this represents a sixth consecutive quarterly loss. Lacking a wide range of generic drugs for recurrent revenue streams, this trend is likely to continue.

From the full-year 2023 revenue of $984 million, Novavax lowered its full-year 2024 revenue forecast to $700-$800 million range. Highly volatile over the last month, NVAX meme stock gained a 30% boost, but the long-term trajectory points downward. Whether expectations are overturned depends on government contracts, which caused the NVAX to rise in the first place.

MicroCloud Hologram Inc. (HOLO)

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MicroCloud Hologram (NASDAQ:HOLO) is up 152% year-to-date, shaming even Nvidia (NASDAQ:NVDA). The company’s purported application of holographic technology, ranging from LiDAR sensor chip design to intelligent 3D vision solutions across industries has driven this speculation.

Chinese MicroCloud onboarded the AI train in February by announcing HDH-GPT (Holo Digital Human GPT) technology. The holographic model could be used to talk to users as they prompt AI with continuous dialog. Thus effectively recreating the scenes from Blade Runner 2049.

However, the meme stock has yet to generate profits, having reported a $20,323 net loss for the period ending Dec. 2022. On Feb. 2nd, MicroCloud filed a reverse stock split, which reduced the number of HOLO outstanding shares to 50,000,000 shares of a nominal or par value of $0.001 each.

This action made it regain the Nasdaq listing requirement last week, following the Nasdaq notice in November for failing to maintain the minimum $1 per share price for 31 consecutive business days. Lacking financial reports and profit-generating products, MicroCloud meme stock is purely driven by speculation.

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.

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