Retail investors flock to penny stocks WeWork, Amyris, Proterra

Proterra

11/08/2023 16:00

By Medha Singh
       Aug 11 (Reuters) - WeWork, a prized startup just four
years ago but now a micro-cap, and other penny stocks such as
Amyris and Proterra are the latest focus of speculative bets
from retail traders, with shares of the financially struggling
firms rising in strong trading volume after hitting record lows
this week.
    The three penny stocks, up in the range of 40% to 120%, were
the most actively traded U.S. shares at 10:45 a.m. ET on Friday.
    Amyris  AMRS.O  and WeWork  WE.N  were the second and third
most traded stocks by retail investors, respectively, while
Proterra  PTRA.O  was twelfth on the list at 10 a.m. ET,
according to J.P.Morgan data.
    Flexible workspace provider WeWork warned it could go
bankrupt this week, a stunning reversal of fortune for a company
that was once privately valued at $47 billion.
    Biotech firm Amyris said it had filed for bankruptcy on
Wednesday and planned to sell its consumer brands to improve
liquidity, while electric-vehicle parts supplier Proterra filed
for Chapter 11 bankruptcy protection earlier this week.
    The gains on Friday come on the heels of Proterra and Amyris
shedding over 90% of their value this week. WeWork has shed 17%
and was on track for its fourth consecutive weekly decline.
    "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 moves were similar to those of meme stocks Bed
Bath and Beyond  BBBY.PK  and Hertz Global  HTZ.O , where retail
traders talked up companies on online forums such as Reddit.
    Some of the latest speculative bets on the penny stocks were
pinned on hopes of a merger and acquisition or a turnaround for
the struggling businesses.
    "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 set of retail traders are looking to capitalize on
the volatility, especially by squeezing bearish investors on
highly shorted stocks.
    "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.
    Last week retail traders had piled into shares of Tupperware
Brands  TUP.N  and trucking firm Yellow  YELL.O .

 (Reporting by Medha Singh in Bengaluru; Editing by Shounak
Dasgupta)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; Twitter: https://twitter.com/medhasinghs))