We recently started a series called “Penny Stock of the Day”. These ideas are geared for traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Nextplay Technologies Inc. (NASDAQ: NXTP)
Today’s penny stock pick is the technology solutions company, Nextplay Technologies Inc. (NASDAQ: NXTP).
NextPlay Technologies, Inc. provides games, in-game advertising, crypto-banking, connected TV, and travel booking services to consumers and corporations. NextPlay’s products and services utilize innovative AdTech, Artificial Intelligence, and Fintech solutions. The company is based in Sunrise, Florida.
Latest 10-k report: https://sec.report/Document/0001580695-21-000154/
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for NXTP in the last 3 months, the stock has an average price target of $3.00 and an average rating of ‘Moderate Buy’. The average price target is a 27.66% change from the last price of $2.35.
Potential Catalysts / Reasons for the Hype:
- Rumors that NXTP is expected to release an app for crypto exchanges and digital wallets in the 4th quarter of 2021.
- The stock seems to be hyped in day trader chat rooms, and elsewhere, in order to artificially increase interest.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock was forming a falling wedge pattern for the past several weeks. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out of the falling wedge pattern with high volume, indicating possible bullishness. The stock is also trading above its 50-day SMA, indicating that the bulls are slowly gaining control.
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and ADX line are above the -DI line, and the ADX line has moved higher from below the +DI and -DI lines.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#5 Above Support Area: The weekly chart shows that the stock is trading above a strong support area, which is marked as a pink color dotted line. This is a possible bullish indication.
#6 Bullish RSI: The RSI is above 50 and moving higher, indicating the strength of the current upmove.
#7 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart and is also moving up from oversold levels, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for NXTP is above the 200-day SMA, at around $2.51.
Target Prices: Our target prices are $3.00 and $3.50.
Stop Loss: To limit risk, place a stop loss at $2.19. Note that the stop loss is on a closing basis.
Our target potential upside is 20% to 39%.
For a risk of $0.32, our first target reward is $0.49, and the second target reward is $0.99. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- The company had incurred net losses year-over-year. As of February 28, 2021, the company had $6.8 million in total liabilities, working capital of $6.0 million, and a total accumulated deficit of $132.3 million. NXP had a net loss of $16.50 million for the FYE on February 28, 2021.
- NextPlay Technologies Inc. was formerly known as Monaker Group Inc.
- The company had filed a $100,000,000 mixed shelf offering. Once this goes into effect, the stock could have a significant decline.
- Despite the company reporting increasing losses year-over-year, the executive compensation increased year-over-year.
- The company had settled certain litigation subsequent to the year ended February 28, 2021.
- On January 15, 2021, Axion Ventures, Inc., filed a civil claim in the Supreme Court of British Columbia alleging that Mr. Bonner and his wife, Ms. Boonyawattanapisut, used their positions as directors and officers of Axion and certain of its subsidiaries, together with the other defendants, to unlawfully take ownership of Axion’s subsidiaries and assets, including its intellectual property.
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.Billionaires Are Dropping Oil for "American Energy" [sponsor]
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