These three small-cap stocks are being shorted heavily currently.
The refreshed geopolitical uncertainty due to the Middle East conflict and disrupted shipping lanes is putting short investors on alert. On top of that, 2024 could see economic turmoil, given that the New York Fed projects a US recession at a 62.3% chance, based on the treasury spread.
A stock float percentage shorted above 50% means that the majority of investors believe the company’s stock will decline in the near future. Here are three companies that currently fit that short bill.
1. Smart for Life, Inc. – 93% Float Shorted
Alongside medicinal drugs, it is commonly known that nutrients play a vital role in preventing diseases. Smart for Life (NASDAQ:SMFL) provides a wide range of products under “nutraceuticals.”
Customers can typically find them in Costco (NASDAQ:COST), Walmart (NYSE:WMT), BJ’s, or Amazon (NASDAQ:AMZN). Greens First, Sports Illustrated Nutrition, and Doctors Scientific Organica are similar wellness brands.
On January 5th, the company announced a completed acquisition audit. Worth $8 million, the acquisition of an eCommerce nutraceutical company will be the largest since Smart for Life went public in 2022.
Since then, SMFL stock has been down 99%, with a 31% devaluation in the last three months. The Q3 2023 earnings report showed $2.7 million in revenue, almost entirely from product sales. This is 39% lower than the revenue in the year-ago quarter.
Given its negative earnings and tiny cap size of only $1.62 per share, analyst ratings for a price target are lacking.
2. Imperial Petroleum, Inc. – 63% Float Shorted
In contrast to Royal Caribbean dominating its sector with a luxury cruise fleet, Imperial Petroleum (NASDAQ:IMPP) has a relatively minor fleet of 10 oil shipping vessels. The Greek company specializes in the transport of petrochemical products, having increased shipping capacity by 150% since Q2 2021.
With the ongoing rerouting of vessels following the Houthi attacks in the Red Sea, IMPP’s bottom line is endangered. More delivery delays and extra costs are expected, particularly fuel costs, insurance costs, and potential loss of cargo.
The shipping company may even experience reduced demand because of these headwinds. As of the Q3 2023 earnings report, Imperial Petroleum delivered $12.1 million net income and generated $29.4 million in revenue. This is 31% lower than the year-ago quarter.
The company repurchased 1.1 million IMPP shares worth $1.9 million to boost investor confidence. Considered undervalued, IMPP stock rose 57% in the last three months, climbing nearly 9% in 2024.
According to TipRanks, IMPP is now rated neutral (4), holding at $2.97 per share. Due to its small-cap weight and 63.29% float shorted, IMPP is now more volatile than usual.
3. RiskOn International, Inc. – 58% Float Shorted
Another small-cap stock, Riskon International (NASDAQ:ROI), is down 98% year-over-year, losing 80% of its valuation in the last three months. Currently priced at only $0.14 per share, investors may have taken the “RiskOn” moniker seriously to its ROI.
Previously called BitNile Metaverse, the company has 16 employees and has complete ownership of BitNile.com. This metaverse platform aims to connect users through the medium of 3D games and both digital and physical products.
BitNile Metaverse itself is a holding company for the management of growth-focused companies. RiskOn’s other subsidiary is GuyCare. As its name implies, it offers focused and discreet care for male healthcare.
RiskOn’s earning announcement is scheduled for February 19th. From Q1 2020 to Q1 2023, the company has steadily lost net income, going from negative $12k to negative $81k. Given these results, it’s likely that the company is close to closing its doors.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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