WeWork, a once-coveted company that is now a micro-cap, as well as other penny stocks like Amyris and Proterra are the newest targets of speculative wagers from retail traders. Shares of the financially precarious companies are surging in significant trading volume after hitting record lows this week.

The three penny stocks were the most actively traded U.S. equities at 10:45 a.m. ET on Friday, with gains ranging from 40% to 120%.

According to J.P.Morgan data, at 10 a.m. ET, Amyris and WeWork were the second and third most traded equities by retail investors, respectively, while Proterra was ranked twelve.

Flexible workspace provider WeWork filed a bankruptcy notice this week, an unexpected development for a company that was once privately valued at $47 billion.

In contrast, Proterra, a manufacturer of parts for electric vehicles, filed for Chapter 11 bankruptcy protection earlier this week. Amyris, a biotech business, revealed on Wednesday that it had filed for bankruptcy and sought to sell its consumer brands in order to increase liquidity.

Over 90% of the value of Proterra and Amyris was lost this week until they experienced increases on Friday. WeWork has lost 17% of its value and was on track to post its fourth consecutive loss for the week.

“Trading turnover from the retail cohort tends to rise as the market experiences larger price swings,” Lucas Mantle, analyst at Vanda Research, said.

The share movements resembled those of the meme stocks Hertz Global and Bed Bath and Beyond, where retail traders praised the firms on social media sites like Reddit.

Some of the most recent speculative wagers on penny stocks were made in the anticipation of a merger and acquisition or a turnaround for the troubled companies.

“The risks are huge although you can argue that the rewards may be so as well,” AJ Bell investment director Russ Mould said.

“Any firm that is priced for bankruptcy but then avoids such a fate could see a big percentage uplift in valuation, not least owing to the low starting point.”

Another group of small-time traders is attempting to profit from the volatility, particularly by pressuring negative investors on heavily shorted companies.

“The allure is simple, massive potential profits in a very short period of time. This gets stronger when the markets are strong,” said Matthew Tuttle, chief investment officer at Tuttle Capital Management.

Retail investors rushed into shares of Yellow Trucking and Tupperware Brands last week.

(Adapted from GlobalXMForex.net)

Categories: Economy & Finance, Entrepreneurship, Strategy, Uncategorized