Robinhood is a discount broker that has gained massive traction in the last few years. The number of retail traders on Robinhood has increased at a rapid clip due to its easy-to-use interface and brokerage-fee trades. As investors tend to start their investment journey with a small amount of capital, they look to purchase lower-priced penny stocks.
Generally, stocks trading below $5 are called penny stocks. Here, we take a look at some three penny stocks that are popular among Robinhood’s retail investors.
Shares of OrganiGram Holdings (NASDAQ: OGI) are currently priced at $3.17 and have already doubled year-to-date. However, OGI stock is down 62% from its record high and has underperformed broader markets in the last two years.
In its most recent quarter, OGI’s sales were down 37% year over year at $14.6 million which is less than impressive given that cannabis sales were staging a comeback after a pandemic hit-year. Cannabis was also declared as an essential product in Canada and was available for curbside pickups and deliveries.
OrganiGram claimed its revenue was impacted due to pandemic-related production as well as processing disruptions. Further, lower wholesale revenue and falling product prices exacerbated the decline.
OGI also reported a negative EBITDA of $8.6 million in the quarter which was significantly higher than the EBITDA loss of $59,000 in the prior-year period. Its net loss widened to $66.3 million in the fiscal second quarter of 2021, compared to a net loss of just $6.8 million in Q2 of 2020.
Uxin Limited (NASDAQ: UXIN) is an investment holding company that operates a used car e-commerce platform in China. It provides a wide selection of used cars and evaluates the car condition. The Uxin Auction application allows businesses to source vehicles through online auctions. The company also facilitates used car transaction services and financing solutions offered by third-party partners to buyers.
Uxin stock is valued at a market cap of $1.92 billion and is currently trading at $5.18 per share. In the fiscal third quarter of 2021 that ended in December, Uxin sold just 2,307 units which was significantly lower than the 28,302 units sold in the prior-year period.
However, Uxin explained it “completed the transformation to inventory-owning model during the three months ended December 31, 2020, with 99% of the transaction volume sold from the Company's own inventory." This allowed the company to generate higher revenue per car sold in Q3 resulting in a 31% decline in sales that stood at $49.5 million.
Uxin also reported a positive gross profit in Q3, compared to a gross loss in Q2 of fiscal 2021. Its net loss narrowed to $26.5 million which was a decline of 82% year over year. The company is closer to achieving profitability compared to the year ago period. While sales might decline 40% on a sequential basis in Q4 to between 190 million yuan ($29.69 million) and 200 million yuan ($31.26 million), gross margin might rise to 5%, up from 2.9% in the December quarter.
A company that is focused on the adoption of commercial electric vehicles as well as the development of financial services and fintech products, Ideanomics (NASDAQ: IDEX) is a penny stock trading at $3.35.
The company’s Mobility division facilitates the adoption of EVs by commercial fleet operators. This division also offers solutions for the procurement, financing, charging, and energy management needs for fleet operators of commercial EVs. The Ideanomics Capital division provides fintech services that focus on the efficiency, transparency, and profitability of the financial services industry.
In the first quarter of 2021, Ideanomics reported revenue of $32.7 million and gross profits of $10.8 million. It ended Q1 with a cash balance of $356 million, providing the company with a deep pool of capital for investments in mobility and capital business units. Analysts tracking the stock expect it to increase sales by 383% to $129 million in 2021 and by 12.2% to $145 million in 2022.
Comparatively, its net loss is forecast to narrow from $0.29 per share in 2020 to $0.07 per share in 2022.
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