Top Reddit Penny Stocks to Consider in 2023

The top Reddit penny stocks in 2023 have the potential to do as well as the most famous Reddit penny stock of all — GameStop (NYSE: GME). In January of 2021, Reddit traders led the most famous short squeeze of all time, which resulted in at least one idiot hedge fund going bankrupt.

$GME shorts after hours…#GameStop #gamestonk #WallStreetBets pic.twitter.com/z4VWrQot2U

— StocksToTrade (@StocksToTrade) February 24, 2021

GameStop gained 1,700% in 3 weeks. In February, it ran another 550%.

This was the birth of the Reddit catalyst in penny stocks. Reddit traders figured out that they could share information just like Wall Street traders, and become a force! Sort of like the Transformers, but with more jokes.

Now the secret is out, and it’s open season on unprepared shorts. Let’s see the stocks Reddit traders are targeting in 2023!

What Are Reddit Penny Stocks?

What we call Reddit penny stocks are the stocks that are most popular on Reddit’s trading forums. Reddit has more subreddits dedicated to penny stocks than to celebrities like Iggy Azalea… The ‘r/pennystocks’ board has 1.9 million members, all discussing penny stocks.

The definition of penny stocks is any stock that trades under $5 per share — but it’s more than that. When I talk about penny stocks, I’m referring to stocks with sketchy business models and long-term projections. Penny stock can trade on major exchanges like the Nasdaq or NYSE, but the ones I really like to trade are on the over-the-counter (OTC) markets and pink sheets.

These are the penny stocks most prone to manipulation. When you’re reading about penny stocks on your Reddit social media feed — or in any internet communities — keep your guard up.

Most Popular Reddit Penny Stocks Worth Considering in 2023

My top Reddit penny stock picks for 2023 are:

• OTCPK: SITS — Southern ITS International, Inc. — The Holding Company Reddit Penny Stock
• NASDAQ: SOFI — SoFi Technologies Inc. — The Banking Crisis Hedge Reddit Penny Stock
• NASDAQ: CXAI — CXApp Inc. — The Cheap AI Stock Supernova
• NYSE: AI — C3.ai Inc. — The AI Sector Leader Stock
• NASDAQ: TOP — TOP Financial Group Ltd. — The SEC-Dinged Chinese IPO Stock 
• NASDAQ: GSIT — GSI Technology, Inc. — The Next Meme Stock?
• NYSE: APRN — Blue Apron Holdings Inc. — The Meme Stock That’s Back from the Dead
• NYSE: CVNA — Carvana Co. — The Short Squeeze Stock

Reddit conversations list stocks from all over the stock market — but some attract more attention than others. The following are some of the stocks that people on Reddit have been writing about the most…

There’s no guarantee I’ll trade any of these stocks. I’m watching them to see if they match my preferred setups — only then will I trade them.

The best traders watch more than they trade — that’s what I’m trying to model here.

Sign up to our NO-COST weekly watchlist here!

Southern ITS International, Inc. (OTCPK: SITS) — The Holding Company Reddit Penny Stock

My first Reddit penny stock pick is Southern ITS International, Inc. (OTCPK: SITS).

SITS is a crappy penny stock with the kind of chart I like. Look at that 1,000% run in January 2021! This stock is one of the alumni of the first great Reddit charge — that means it will always be on my Reddit watchlist.

What I like even better is the nearly 500% gain it posted from March to May 2023. That’s proof of one of my biggest penny stock lessons…

Former runners can run again.

SoFi Technologies Inc. (NASDAQ: SOFI) — The Banking Crisis Hedge Reddit Penny Stock

My second Reddit penny stock pick is SoFi Technologies Inc. (NASDAQ: SOFI).

Let’s dive into an arena that’s undergoing seismic shifts due to the ongoing banking crisis… financial technology, or fintech.

Traditional banks are in trouble, and some are failing. But here’s the thing — tragedy often leads to opportunity.

Fintech companies, particularly those offering digital banking and lending, are stepping up to fill the void. SOFI is a prime example.

SOFI had a rough 2022, but a major turning point is on the horizon: the end of the federal student loan repayment pause in August 2023.

The end of this pause, in effect since early 2020, should get the ball rolling again for SOFI.

SOFI’s been on a tear in May and June 2023 — rising 100%. This could be just the beginning.

CXApp Inc. (NASDAQ: CXAI) — The Cheap AI Stock Supernova

My third Reddit penny stock pick is CXApp Inc. (NASDAQ: CXAI).

This is one of the hottest runners in 2023.

It first spiked on April 13. In May it spiked again.

In June, it looks like it’s consolidating near its highs. It might be setting the table for another leg up.

It isn’t the AI sector leader — that’s C3.ai Inc. (NYSE: AI). But it’s just above penny stock range, which makes it accessible to more traders and capable of bigger spikes!

Don’t leave the kettle on with these stocks. Traders should love volatility of hot sector stocks like this — but they should also protect themselves from their downsides.

This stock may be worth a lot more in a few years, or it might be worth nothing. No one knows. If you build a smart trading plan, you could ride CXAI’s highs while protecting yourself against its downside potential.

C3.ai Inc. (NYSE: AI) — The AI Sector Leader Stock

My fourth Reddit stock pick is C3.ai Inc. (NYSE: AI).

Just when AI was starting to look toppy, it spiked 15% on June 13…

That’s pretty good for a stock that was on the cusp of $40!

This is what being a sector leader can do for you. Even though AI itself had no news, it ratcheted up because of Oracle’s announcement that their cloud services were in demand because of AI.

It doesn’t hurt that the sector AI leads is the hottest sector on the market.

TOP Financial Group Ltd. (NASDAQ: TOP) — The SEC-Dinged Chinese IPO Stock 

My fifth Reddit stock pick is TOP Financial Group Ltd. (NASDAQ: TOP).

Over two days in late April, TOP launched over 3,700%.

In doing so, it gave birth to a short-lived hot sector — Chinese IPOs.

You might remember another Chinese IPO from last year…

Due to the uncharacteristic price movement, the SEC halted TOP trading on May 12. Trading resumed May 30, but the stock has been quiet since.

This sector is a powderkeg — it could go off at any time.

GSI Technology, Inc. (NASDAQ: GSIT) — The Next Meme Stock?

My sixth Reddit stock pick is GSI Technology, Inc. (NASDAQ: GSIT).

GSIT is a Reddit stock if there ever was one. Just read what MarketWatch reported:

“An influential meme stock trader, who goes by the name Obi and participates in the WallStreetBets group on Reddit as Major-Access2321, told MarketWatch that he sees meme-like parallels between GSI Technology and Top Financial Group Ltd. The Hong Kong-based trading firm’s stock skyrocketed more than 890% last month, before pulling back.”

Of course, Obi also championed crappy meme stock Mullen Automotive (NASDAQ: MULN), so take this recommendation with a grain of salt.

One thing that isn’t a mirage is GSIT’s 350% run from mid-May through mid-June. The rally started out of nowhere — maybe from a mention of the company on Fox Business, where GSIT was proposed as a superior bet to NVIDIA Corp. (NASDAQ: NVDA) in terms of an AI pure play.

In the time since, GSIT has proven that it has staying power. I’ll be watching to see how much higher it can go!

Blue Apron Holdings Inc (NYSE: APRN) — The Meme Stock That’s Back from the Dead

My seventh Reddit stock pick is Blue Apron Holdings Inc (NYSE: APRN).

For the past year, APRN has been a meme favorite. This isn’t because of any fundamental thesis circulating on Reddit — it’s because of a short interest that routinely exceeded 50%.

It spiked 100% June 9 after doing a 1-for-12 reverse split. It still has high short interest, but now its fundamentals are looking more solid…

It cut down on debt and improved its cash flow. This plus high short interest might make for a deadly combo. 

Carvana Co. (NYSE: CVNA) — The Short Squeeze Stock

My eighth Reddit stock pick is Carvana Co. (NYSE: CVNA).

The short squeeze du jour is CVNA… It’s riding a 400% run into mid-2023 and showing no sign of slowing down!

Short interest has been at 50% during its May eruption. Don’t think that Reddit traders don’t notice.

These 3 dudes smarter than any short seller I've ever met.$GME https://t.co/3676VHjFEk

— Timothy C. Bohen 🇺🇸 (@tbohen) January 29, 2021

The shorts have a point. Year-over-year revenue is down 25%. Share value is down 93% from its 2021 peak!

The point for traders is that this stock is in the midst of a technical breakout. I wouldn’t hold this stock for the next five years, but right now it’s looking pretty squeezy. 

What to Consider When Trading Penny Stocks Popular on Reddit

When trading penny stocks popular on Reddit, you want to tread carefully. Reddit forums like r/WallStreetBets have become influential market movers, often driving sharp price increases in certain penny stocks. 

Here’s the “but” — these price movements are driven by speculation and crowd mentality, not by a company’s fundamentals. That means these stocks could collapse as soon as the excitement dies down.

Do Thorough Research and Utilize Resources from the Community

In the world of penny stocks, knowledge is power. Armed with the right information, a savvy trader can spot an opportunity that others might overlook. 

Reddit is a starting point, a place to find the pulse of the crowd. You’ll need to supplement the info you find there with your own detailed research.

Don’t just rely on the buzz in Reddit comments. Dig deeper. Take advantage of the wealth of data, resources, and technology available at your fingertips to unearth the facts about the company behind the stock. 

For those looking to explore trading on Robinhood, understanding the nuances of Robinhood penny stocks can be a game-changer. From identifying trends to analyzing financials, the right tools can make a significant difference.

I use StocksToTrade to scan for news, tweets, earning reports, and more — all covered in its powerful news scanner. 

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Monitor Market Trends and Analyze Companies’ Financials Carefully

When trading penny stocks, you’re not just investing in a company — you’re investing in the broader market too. 

Keep your eyes on the NYSE, Nasdaq, and over-the-counter (OTC) markets to keep up with market sentiment. 

Don’t stop at the chart. You should also check the company’s financials. 

Is their balance sheet strong? Do they have positive cash flow? Do they have a viable business model? These questions help me decide whether to hold a stock overnight.

Set Your Risk Tolerance Appropriately

Trading penny stocks comes with as much downside as there is upside. 

Set your risk tolerance appropriately. The true measure of a trader is how they respond to losing — so make sure any money you put into penny stocks is money you can afford to lose. 

The volatility of penny stocks means they can experience significant price swings in a short period, and it’s up to you to protect your account.

Regularly Monitor Your Investments

If your trading strategy is a long-term one, make sure to regularly monitor your investments. This should be happening whether you’re trading penny stocks or blue-chip companies. 

Keep a close eye on the news surrounding the companies you’re invested in. Regular monitoring allows you to react quickly to changes and make informed decisions based on the latest information.

Diversify Your Portfolio with Different Types of Assets

One investing strategy involves diversification. 

You know that you don’t want to put all of your money into one stock — that’s a gambling maneuver, not a strategy. Diversification could include a mix of blue-chip stocks and hot runners, or it could include an asset mix.

If you’re interested in expanding your portfolio, consider exploring Nasdaq penny stocks to find potential hidden gems.

The only rule here is to make sure you research all your investments and build a trading plan that you stick to!

Managing Penny Stock Risks

Managing risk should be the most important part of your trading strategy. 

Here’s what you should be paying attention to…

Risk Mitigation Techniques

Risk mitigation can involve strategies like diversification, hedging, and stop-loss orders. Don’t be afraid to exit a position if the chart is looking bad.

Remember: only losers hold losers!

Position Sizing

An essential part of risk management is position sizing.

New traders are usually too aggressive. They haven’t experienced the dangers of the markets.

Your number one job is to protect your account. Good position sizing insulates you from one trade hurting you too much.

When you start off, I recommend a fixed position size in dollars. For example, your position size could be $100 for each trade.

From there, you could move on to risk-based position sizing. This usually is measured in relation to the size of your overall account.

When you start day trading, stick to a small risk, like 1% or less of your account. That can potentially help you stay in the markets longer.

Position Size Calculator 

Number of Shares = Account Value x Percentage Risk / (Entry Price – Stop Price)

Position Size = Number of Shares x Entry Price 

Enter your stop price, entry price, percentage risk, and account value to find your risk-based position size.

Stop-Loss Orders

Stop-loss orders are a MUST for managing risk. Whether you set an automatic stop-loss or just have a clear plan in your head, cutting losses is essential.

Automatic stop-loss orders let you specify a price at which you’ll automatically sell a stock if it drops to that level. This can help you limit your losses if a stock’s price takes a dive.

Just be careful — if a stock falls through your stop AND your limit, it might not execute. This can leave you with bigger losses than you’d planned for.