3 Penny Stocks to Sell in April Before They Crash & Burn
Owing to their low market capitalization, penny stocks are notoriously volatile. Like altcoins, this drives speculative trading and pump and dump schemes. The VIX is up 24% over the week and there has been increased market volatility. Therefore, it’s crucial to identify which penny stocks to sell and reassess your penny stock portfolios.
Amid these market dynamics, it’s noteworthy that over the past 12 months the CPI index has ascended by 3.5% before seasonal adjustment. This was a climb that overshadows the 3.2% annual rise reported up until February.
Although penny stocks remain popular among retail investors due to low entry capital, the high risk, high reward strategies in play result in even greater volatility. The question is, which penny stocks have shown sufficient financial weaknesses to kick them out?
Let’s identify three penny stocks to sell, each presenting substantial risks in the current market environment
Greenlane Holdings (GNLN)
Year-to-date, Greenlane Holdings (NASDAQ:GNLN) is up 9%. Shareholders of this penny stock are betting on their exposure to weed culture. In particular, Greenlane handles the distribution of premium cannabis-based vape solutions, packaging, accessories and other paraphernalia.
Expanding through a wide range of brands from VIBES and Marley Natural to Pollen Gear, Greenlane tapped into over 8,000 retail sites. The problem is, long-term legalization of cannabis seems to either be halted or go in reverse.
For a while, it looked as if the federal decriminalization of marijuana was in the cards. This was furthered as 24 states legalized recreational use. However, arguments used in Wyoming’s March ban of hemp-derived THC products suggest that sentiments are shifting.
More importantly, the marijuana market has troubles taking share from illicit market participants. In that dynamic, regulated market participants hold a heavier burden which they have to unload to customers. Greenlane managed to lower its net loss significantly since Q3 2022. However, its continued net loss in Q3 ‘23 of $10 million is still a cause for concern.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID), following the trajectory of the Western EV leader, Tesla (NASDAQ:TSLA), has experienced a downturn of 37% year-to-date. At $2.61 per share, LCID is now close to its 52-week low price of $2.54. Although investors could see this price point as a buying on the weakness opportunity, Lucid Group is no Tesla.
As the EV sector struggles to penetrate the affordability adoption wall, Lucid Group placed its cards on luxury EVs. In particular, the high-end Lucid Air sedan and the upcoming Lucid Gravity SUV. Ahead of Gravity’s launch, the company secured $1 billion in funding from Ayar Third Investment Company (“Ayar”) in March.
While this news was bullish, it remains to be seen if it translates to Lucid’s earnings per share. In February’s earnings call for full-year 2023, the company reported net loss of $2.8 billion. This was up 115% from the net loss in 2022. This was despite delivering 37% more EVs than in 2022, suggesting that Lucid Group has great difficulties in scaling operations.
Kaltura (KLTR)
Year-to-date, Kaltura (NASDAQ:KLTR), one of the penny stocks to sell, is down nearly 24%. At $1.34, KLTR is also close to its 52-week low price of $1.17 per share. In the age of AI models, many penny stocks should be revised and Kaltura is one of them.
That’s because Kaltura’s business model is centered on processing video content with additional features to make it more enticing and illustrative. As such, Kaltura’s online video platform is largely used by the educational sector.
Outside of Online Video Platform (OVP) for distributing and monetizing content, Kaltura also has a Cloud TV division, Education Video Platform (EdVP) and Enterprise Video Platform (EVP). All of these divisions are heavily pitted against Microsoft’s Azure and accompanying AI-powered services, as well as Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL).
With AI advancements and AI integration across the Big Tech, it is likely that Kaltura’s market reach will hit a wall sooner rather than later.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More:Penny Stocks — How to Profit Without Getting Scammed
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.
