Catalyst Pharma, TherapeuticsMD May Be Next WallStreetBets Targets

Investing

Published: January 29, 2021 7:37 am

Now that AMC, GameStop, American Airlines and Bed, Bath & Beyond have been pushed to wild levels, well above any sane valuation, the question is which companies will be the next to be “recommended” by members of the WallStreetBets message board on Reddit and traded heavily through online brokerage firm Robinhood. A few troubled companies with low share prices fit the profile and are already favorites of Robinhood traders.

First on the list is Catalyst Pharmaceuticals Inc. (NASDAQ: CPRX). The tiny biopharmaceutical company has been embroiled with a lawsuit against the U.S. Food and Drug Administration. It had very modest revenue of $29 million in the last recorded quarter. The company is in the midst of trying to gain patents, an uncertain process. Its stock has sold off over the past year. There is enough of a market in the stock so that it trades about 1.5 million shares a day. This stock is listed as among the 100 most popular on Robinhood. It has 10 million shares sold short, which would take six days to cover.

TherapeuticsMD Inc. (NASDAQ: TXMD) is down 36% so far this year, and it trades over 5 million shares a day. Its total revenue is a tiny $19 million. It lost $32 million in the most recent quarter. It has over 66 million shares sold short, which would take 13 trading days to cover. It is also among Robinhood’s 100 most popular stocks. In other words, it is already on trader radars.

Investor Place recently mentioned other stocks that might be targeted. These included Ligand Pharmaceuticals, FuboTV, Macerich and SunPower.

What is certain about the “next” GameStop is that it will be hit fast and hard. That has been the pattern so far. Shorts will need to cover as buyers pour in. Maybe Robinhood will restrict trading and drive their prices down as fast as they came up.