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: Joby Aviation Inc. (NYSE: JOBY)
Today’s penny stock pick is the air taxi service company, Joby Aviation Inc. (NYSE: JOBY)
Joby Aviation Inc. engages in building an electric vertical takeoff and landing passenger aircraft optimized to deliver air transportation as a service. It intends to build an aerial ridesharing service.
Website: https://www.jobyaviation.com
Latest 10-k report: https://sec.report/Document/0001193125-21-066191/
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for JOBY in the last 3 months, the stock has an average price target of $6.00.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company announced partnership with SK Telecom, South Korea’s leading telecommunications company to introduce emissions-free aerial ridesharing services to cities and communities across South Korea.
- Corporate Insiders Bought Shares Worth $2.1M in the Last 3 Months.
Insiders | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel: The daily chart shows that the stock has been trading within a downtrend channel for the past several months. This is shown as purple color lines. The stock has currently bounced higher from the lower rail and looks poised for a breakout soon. Once a stock breaks out of a downtrend channel, it could move higher.
JOBY – Daily Chart
#2 Bullish RSI: The RSI is above 50 and moving higher, indicating possible bullishness.
#3 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#4 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.
#5 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This is a possible bullish indication.
JOBY – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#7 Oversold RSI: In the weekly chart, the RSI is currently moving higher from oversold levels, indicating that the stock may move higher soon.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for JOBY is above yesterday’s high, at around $5.10.
Target Prices: Our first target is $6.80. If it closes above that level, the second target price is $8.00.
Stop Loss: To limit risk, place a stop loss at $4.10. Note that the stop loss is on a closing basis.
Our target potential upside is 33% to 57%.
For a risk of $1.00, our first target reward is $1.70, and the second target reward is $2.90. 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 has a history of net losses. For the period from July 3, 2020 (inception) through December 31, 2020, JOBY had a net loss of approximately $63.9 million.
JOBY – Net Loss
- The company was formerly known as Reinvent Technology Partners.
- JOBY has not generated any operating revenue to date. It is also a newly incorporated company with no operating history, making it difficult to evaluate the company’s ability to achieve its business objective.
- JOBY has significant competition from the likes of Boeing, which has upped its investment in Wisk Aero, another eVTOL start-up. Boeing is the sort of deep-pocketed competition that could be tough for a start-up like Joby to deal with.
- Although the company’s the tech has potential, it is still years away from commercialization. The earliest time expected is 2024, which could give competitors a head start.
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!
Happy Trading!
— 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.
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