Top 7 Robinhood Penny Stocks to Watch in January 2023

Penny stocks trade at $5 per share or less. You can trade penny stocks on Robinhood as long as they are listed on a major exchange like the NYSE or Nasdaq. The fact that Robinhood traders can’t access the OTC markets, which is where most penny stocks trade, only adds to the volume they pour into listed penny stocks.

There’s nothing special about using Robinhood as your broker. What is different about Robinhood is how its traders behave …

In 2020, Robinhood traders bought and sold options contracts at 88 times the rate of traders who use Charles Schwab, a more traditional broker. They traded 40 times the per-dollar amount of stocks as Schwab traders.

But somewhere in there, these trigger-happy traders figured out how to organize.

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

— StocksToTrade (@StocksToTrade) February 24, 2021

They learned that they could work together and beat Wall Street at its own rigged game. Their tools are memes, hot sector mania, and the short squeeze.

While I don’t advise that SteadyTrade Team members act like Robinhood traders, there’s plenty of value in knowing what they’re watching.

Right now, these stocks are at the top of the list …

Can You Buy Penny Stocks With Robinhood?

It depends on the penny stock. You can access penny stocks on the Nasdaq or NYSE exchanges with Robinhood.

But no dice if you’re into OTCs or pink sheets. Robinhood doesn’t have access to OTCs on its platform.

Which kinda sucks, because OTC stocks can run hundreds of percentage points. If you’re interested in capitalizing on that volatility, stop what you’re doing and watch this video … 

That said, I put together a list of penny stocks you can find on Robinhood. 

If you’re looking for more of the hottest stocks, sign up for my weekly watchlist!

List of the Hottest Penny Stocks on Robinhood in January 2023

My top 7 Robinhood penny stocks to watch for January 2023 are:

• (NASDAQ: BBBY) — Bed Bath & Beyond Inc.  — Meme Penny Stock 1A
• (NYSE: PRTY) — Party City Holdco Inc.  — Meme Penny Stock 1B
• (NYSE: BBAI) — BigBear.ai Holdings Inc. — The AI Penny Stock Spiker
• (NASDAQ: BWEN) — Broadwind Inc.  — The Junky Green Energy Penny Stock
• (NYSE: APRN) — Blue Apron Holdings Inc.  — The Potential Short Squeeze Penny Stock
• (NASDAQ: BIOR) — Biora Therapeutics Inc.  — The Low-Float Biotech Penny Stock
• (NASDAQ: SMMT) — Summit Therapeutics Inc.  — The Multi-Week Biotech Runner Penny Stock

The January effect is in full swing right now. In January, small-cap stocks usually experience some gains after the tax-loss selling of December…

Losing stocks tank even more than usual in the month. When January rolls along, their depressed prices are ripe for spiking.

But there’s another force that’s been making itself known in the market these past few years…

Robinhood traders flush with cash from Christmas, trying to make failed retailers succeed again!

In August, their big target was Bed Bath & Beyond Inc. (NASDAQ: BBBY). When GameStop CEO Ryan Cohen sold his stock, BBBY started to crater…

Now BBBY is back, the same as Party City Holdco Inc. (NYSE: PRTY). It doesn’t matter that both of these stocks are on a one-way trip to bankruptcy.

In this article, I break down the way to trade bankruptcy plays like BBBY and PRTY safely.

Robinhood bulls don’t charge because they think a stock has good prospects. They charge when they see the kind of crazy short interest both of these stocks have shown.

Don’t follow the crowd when you’re trading penny stocks, but it’s always good to know what they’re doing. That way you can take advantage of momentum while still staying safe.

I’m just watching these stocks. This is one of many watchlists I maintain …

Sign up here to get my weekly watchlist each Sunday!

There’s no guarantee that any of my watchlist picks will be tradeable. But if something happens, smart traders should be ready.

Best Robinhood Penny Stocks for January 2023

These are the top 7 Robinhood penny stocks to watch in January 2023 …

They have a chance to catch fire …

Watch them — and don’t get burned!

#1: Bed Bath & Beyond Inc. (NASDAQ: BBBY) — Meme Penny Stock 1A

My first Robinhood penny stock pick is Bed Bath & Beyond Inc. (NASDAQ: BBBY).

BBBY and the next stock on this list have dominated the day trading community in the beginning of January. 

BBBY’s 250% gains aren’t due to anything changing about the company’s bankruptcy potential. In fact, the company has said that bankruptcy is fast approaching as recently as January 5. That was right around when the stock hit its all-time low.

After a January 8 earnings call, the stock rebounded strongly. But don’t get too confident — BBBY is still on a one-way trip to nowheresville.

During the call, Bed Bath & Beyond CEO Sue Gove outlined $80 million to $100 million in cost cuts. But that’s actually not enough. The company posted an operating loss of $225 million in the holiday quarter, which was supposed to save them after losing more than a BILLION DOLLARS in the first three quarters. Only $153.1 million in cash remains on the balance sheet.

I know 50% short interest is a lot, and we might be headed towards an epic squeeze. I can know that while still understanding that these shorts are absolutely correct. BBBY will go bankrupt sooner rather than later.

It’s the same situation we were in in August, when Small Cap Rockets’ Bryce Tuohey made this video:

You can trade a stock like this, as long as you understand the end game. There is no surprise twist coming. It’s going to have the same story as Redbox, one of last year’s meme stock stars.

Do you know what Redbox is worth now? Nothing, because it doesn’t exist anymore.

Day trade only.

#2: Party City Holdco Inc. (NYSE: PRTY) — Meme Penny Stock 1B

My second Robinhood penny stock pick is Party City Holdco Inc. (NYSE: PRTY).

I’ve been talking about this stock’s monster squeeze potential for a long time. Now it looks like it’s finally making good on that potential.

Fintwit short sellers when they cover for a 125% loss after being down 400%+ pic.twitter.com/TW0NMeJpv8

— Timothy C. Bohen 🇺🇸 (@tbohen) March 24, 2021

It might be too little, too late. Just like BBBY, PRTY was hitting all-time lows on January 6 before it had an awesome bounce…

It spiked almost 400% over the next two days. But don’t be suckered in. PRTY is even further along in its bankruptcy journey than BBBY…

Bloomberg recently reported that they don’t even have the money to pay for their own bankruptcy proceedings!

This analyst quote from a CNBC article says it all:

“We don’t love the strength in nonsense stocks like AMC, CVNA, GME, BBBY, PRTY, etc.,” said Adam Crisafulli, founder of Vital Knowledge. “This just means people are blindly chasing.” 

PRTY doesn’t have the same short squeeze potential as BBBY. Only 15% of their float is held short. That’s because their stock is worth pennies.

Think about that risk to reward. Why would you short a 43-cent stock when you know that a short-hating mob is ready to pile in at the drop of a hat?

That doesn’t mean there’s nothing going on here. PRTY traded more than double its 60 million share float on both January 10 and 11…

Just be extra careful if you trade it.

#3: BigBear.ai Holdings Inc. (NYSE: BBAI) — The AI Penny Stock Spiker

My third Robinhood penny stock pick is BigBear.ai Holdings Inc. (NYSE: BBAI).

When BBAI spiked nearly 300% in premarket on January 12, I said that it checked “11 out of 10 boxes” for a big runner. Let’s list them out:

• Hot sector
• Government contract
• Former runner
• GREAT volume
• Multiple float rotations in premarket
• Chat pump
• January effect beneficiary

Ultimately BBAI failed. What happened? Shorts started to make their case.

The Breaking News guys did a great job here. A lot of people jumped into this stock at the open, and doubled down on their belief when they should have been watching their risk. They couldn’t understand why this ultimate box-checker failed.

They became attached.

At the end of the day, BBAI is just a thinly-traded low float stock with a chat pump…

You should always keep in mind what a stock like this is — a four-letter ticker to use as a trading vehicle.

Traders saw the headline of a $900 million contract. But prominent short seller William Blair read the fine print and wrote, “They still may not receive a single dollar from the Air Force.”

It doesn’t mean that he was right, and that all the losing traders were wrong.

Trading isn’t a guessing game. We formulate a plan based on evidence. If it doesn’t work, we cut our losses.

If you were caught off-guard by BBAI failing, I recommend that you get a top-tier news service like Breaking News Chat on your side.

Get a 14-day trial of Breaking News Chat and StocksToTrade for only $17.

I’m keeping this on watch because BBAI is hanging around. It’s still loaded with shorts.

#4: Broadwind Inc. (NASDAQ: BWEN) — The Junky Green Energy Penny Stock

My fourth Robinhood penny stock pick is Broadwind Inc. (NASDAQ: BWEN).

This is a trashy, junky, scam, B.S. company…

That just had a day 3 surge.

The stock spiked after BWEN signed a $175 million contract to build wind turbines. Not bad for a company that lost money last year!

It spiked nearly 100% from market close January 10 to the morning of January 11… then it just chopped around a bunch. It wasn’t till January 13 that it broke the $5 level.

The last time BWEN was on our radar was in August, when it was a beneficiary of the market’s irrational confidence around the Inflation Reduction Act’s tax credits for green energy companies. It couldn’t hold onto its gains then. Everything I said about BBAI is true about this stock too…

It’s just a four-letter ticker to use as a trading vehicle.

Right now, it’s surging. Soon enough, it will dilute or traders will get bored and the price will fall.

There might be some trades to make before that happens.

#5: Blue Apron Holdings Inc. (NYSE: APRN) — The Potential Short Squeeze Penny Stock

My fifth Robinhood penny stock pick is Blue Apron Holdings Inc. (NYSE: APRN).

The buzz has been out about an APRN short squeeze for forever…

That’s because this stock has been downtrending for forever. Despite APRN occasionally riding meme spikes — and the pandemic temporarily boosting the company’s flawed business model — its five-year chart is awful. Something you won’t see reflected in the long-term price is the 1-for-15 reverse split that APRN carried out in June 2019.

That’s right around when I wrote the post “Beware of Blue Apron.” The same caution still applies…

Avoid long-term downtrending stocks when they have poor fundamentals!

That doesn’t mean you can’t day trade APRN. Between January 12 and 13, this stock spiked by 50% on no news!

It gave most of those gains back, but that doesn’t mean smart traders couldn’t make a profit. That just highlights why this stock shouldn’t be a long-term play. 

The short interest is massive — almost 50% of the float. There’s good reason for that, but it’s also a big risk on a meme stock like APRN. Keep it on watch, but be very careful.

#6: Biora Therapeutics Inc. (NASDAQ: BIOR) — The Low-Float Biotech Penny Stock

My sixth Robinhood penny stock pick is Biora Therapeutics Inc. (NASDAQ: BIOR).

This newly-minted low float biotech jumped 200% on news of FDA support for its upcoming clinical trial on its ulcerative colitis drug. After conducting a 1-for-25 reverse split on January 3, the volume that poured into this 6-million float stock was good for multiple float rotations.

The market didn’t react well to its reverse split — but then again, the market hasn’t reacted well to anything BIOR has done in the past 14 months. Even with the recent gains, BIOR has lost 96% of its value over that timeframe.

This is the type of bottom-of-the-barrel biotech that Robinhood traders love to trade. It’s sure to dilute in the future…

I’m not sure that will happen immediately. The market is still trying to gauge BIOR’s value after the reverse split. I don’t know if BIOR wants to destroy this goodwill immediately to get a quick cash infusion.

Like most biotechs without a product on the market, BIOR is bleeding cash. Its business model right now is luring in excited traders and selling its stock. Let’s see how high its run takes it before BIOR cashes in.

#7: Summit Therapeutics Inc. (NASDAQ: SMMT) — The Multi-Week Biotech Runner Penny Stock

My seventh Robinhood penny stock pick is Summit Therapeutics Inc. (NASDAQ: SMMT).

If you want to see how long money-losing biotechs can hang around, just check out SMMT’s last month.

In December, SMMT gained about 775% on a multi-week run. The catalyst was a $5 billion licensing deal for a Chinese cancer drug currently in clinical trials.

Another catalyst was its 17% short interest prior to this rally. Right now the short interest is down to less than 1%.

SMMT is still hanging around. With its last dilution only 7 months ago, SMMT might be seeing how far this rally can go.

Types of Penny Stocks on Robinhood

Robinhood is a retail-focused brokerage. That means it only allows clients to trade on major exchanges such as the NYSE and the Nasdaq.

There’s a ton of stocks below $5 on these exchanges. The problem is, you’re only getting part of the pie.

The OTC markets and pink sheets also offer a huge range of volatile penny stocks … But you’ll need a different brokerage account to trade them. Robinhood won’t cut it. Check out this post for the lowdown on how to find the best brokerage for you.

How to Find Penny Stocks on Robinhood 

Don’t follow my stock picks blindly. You’ve gotta become self-sufficient. Sure, you can find penny stocks on Robinhood’s mobile app… 

But I recommend creating your watchlists from your laptop — it’s a lot easier. Use a screener to search for stocks below $5. You’ll probably want to find some with volume too.

But it’s impossible for one person to watch every penny stock on Robinhood. So either grab a couple of friends to help you stare at hundreds of stocks … or choose a few that show good potential.

How to Choose Penny Stocks on Robinhood

Choosing penny stocks to trade requires a number of well-planned steps. Doesn’t matter which broker you use.

It’s all about finding hyped-up stocks. Then you ride the momentum and jump off before the move crashes. That can make it sound easy. It’s not. It takes years of education and planning to learn how to ride the momentum in this niche.

But here’s a quick overview…

First, look at stocks with hype. Maybe there’s a news catalyst that day. It could be trending on social media, or maybe it’s just a current hot stock.

Next, make sure that the stock’s daily trading volume is high enough to allow you to get in and out easily. Remember managing risk.

It’s also important to check the price action on the stock chart. Reading the chart can help you pick a perfect entry position. It can also show good places to set your stop loss and help you understand what the stock’s next move might be.

Chart reading doesn’t have to be complicated. In fact, many seasoned traders look for clean and simple chart patterns.

Keeping up with news, watching the charts, and analyzing trading volume can all be done on a number of different apps … But if you want to get serious about your trading, there’s a much more effective way to do all of these things… 

Get a 14-day trial of StocksToTrade for just $7 for access to one of my most powerful stock trading tools on the planet. It’s your one-stop shop to help simplify your trading.

How to Trade Penny Stocks on Robinhood

If you’re gonna trade penny stocks on Robinhood — or anywhere else — you better know the restrictions. 

Pattern Day Trading Rule

You have to keep the pattern day trading (PDT) rule in mind. This rule isn’t specific to Robinhood. If you have a small account, it can affect your trading.

The rule limits traders to no more than three day trades within a rolling five-day trading period. That is unless you have $25K or more in your trading account.

It can seem inconvenient — especially for new and excited traders — but it’s actually meant to protect you. Most traders lose money. The PDT rule tries to stop newbies from overtrading.

Try to see it as a good thing. It’ll force you to only focus on the best trades. That’s the best study tool there is.

Robinhood Day Trading Limit

The PDT rule can be a big problem for some traders. But again, I encourage you to see it as a good thing. No, you don’t have to listen to me…

Just like when I said that I didn’t think Robinhood had the best day trading software around. You can use it if it works for you. But understand that different brokers can work better for different people.

Don’t limit your options by choosing one just because it’s easy.

This is important, so pay attention. Do your research. Only you can decide which broker and trading platform are right for you.

Decide whether you’ll trade with a cash account or use margin. Margin is automatic on some Robinhood accounts. That can be risky. Read more about margin here.

You also need to figure out if you want access to extended-hours trading. That can also come with risk. I don’t recommend that for new traders.

What’s key is access to charts, watchlists, stock research, Level 2 data, and indicators. You can get all that and more with StocksToTrade. Plus you can trade right from the platform with our broker integration — and you can add on what’s arguably the trading chat room. 

When you start trading you have a lot of decisions to make. So take your time. Make a detailed list of what matters to you, then find the right broker and trading platform.

Robinhood Penny Stocks to Watch: How to Make Your List of Penny Stocks

When you build the habit of searching for the best stocks and trading setups, you’ll quickly develop a list of stock tickers that’s long. It happens to every trader…

That’s where watchlists come in handy. It’s your personal collection of stock tickers that you think show potential. Most traders keep multiple watchlists, such as one for a certain sector and others for specific chart setups. How you organize it is all up to you.

Need help with your watchlists? Learn from my process every week. Sign up for my no-cost weekly watchlist and I’ll send you my top picks for the week every Sunday!

Should You Trade Penny Stocks on Robinhood?

Robinhood can be more popular with newer traders. But as traders progress past newbie status, they tend to switch to a more robust platform.

Whether you should use Robinhood to trade penny stocks is up to you. But before you make a decision, you should know the advantages and disadvantages that come along with it. 

Let’s take a look at a few.

Advantages

Free Trades: There are no commission fees with Robinhood trades — that’s one of its biggest draws. But realize they gotta make money somehow. And that could potentially affect the quality of your trade executions

No Account Minimum: Traders can start right away because there’s no account minimum.

Ease of Use: More people are on their smartphones a lot these days. Robinhood’s app can make signing up for and funding an account quick.

Streamlined Interface: One of Robinhood’s drawbacks is that it lacks the tools and resources other brokers have. But its focus on simplicity can be useful for less-knowledgeable traders. Just know that as your skill set expands, you’ll likely outgrow this platform.

Fractional Shares: Robinhood has fractional shares. That means traders can pay as little as $1 for a portion of a share, even if that share’s full price is hundreds of dollars.

Disadvantages

No OTC Trades: One of the biggest disadvantages of using Robinhood is that it doesn’t allow OTC trades. If trading penny stocks is your strategy, that takes a huge amount of low-priced stock opportunities off your table.

Poor Phone Support: I haven’t tried Robinhood personally, but I know people who have. I hear a lot of reports that it’s difficult to get in touch with a human being. It looks like they’re starting to realize the importance of customer satisfaction. They’ve been expanding their live phone support to try to fix the problem. If you’re trading with real money, you want to know your broker will be there for you if you need help. Communication may be getting better at Robinhood, but seems to be slow going.

App Dependability: Look online and you’ll see complaints about Robinhood’s app reportedly failing at crucial times. This is a serious concern for traders using real money.

Limited Functionality: Robinhood lacks the tools and resources more experienced traders expect.

Potentially Delayed Data: Stock quote data may be delayed as much as 20 minutes. Yep, that’s a problem if you’re trading low-priced stocks. They move fast.

How to Manage Risk on Robinhood

In Hollywood movies, stock traders are often portrayed as high-octane risk-takers. But in reality, the habits of most successful traders aren’t quite as exciting.

The first thing smart traders think about before entering a trade is how to manage risk.

It means you don’t lose more money than your trading plan allows. It’s important to be able to exit positions easily with little stress. When you have a bad day in the market, at least you’ve done your best to protect your account and live to fight another day.

One way to manage risk is to set stop-loss levels. You can place an order with your broker to close a position if you lose too much money. For those disciplined enough, top traders set mental stops and manually close positions that hit loss limits.

Traders can place stop-loss orders from the Robinhood app. They should work as long as there’s enough trading volume in your stock.

Can You Get Rich Trading Penny Stocks?

I hate this question.

Look, you can get rich doing just about anything. Go to med school and become a brain surgeon. Sell the finest underwater woven baskets the world has ever seen. Brew kombucha in your garage. Pump penny stocks.

OK … some of those might be a stretch. My point is anything is possible.

But day trading is hard. Day trading penny stocks on Robinhood can be even harder.

It’s not impossible to get rich in this niche. But be realistic with your expectations. Nothing good ever came from laying around on your butt thumbing through stock pick articles.

If you’re serious about trading penny stocks, start taking your education seriously.

If you’re looking for mentorship, a trading education, and a trading community, come join the SteadyTrade Team. We connect live twice every trading day to watch the market and make solid trade plans. Join us! 

Frequently Asked Questions About Robinhood Penny Stocks

Does Robinhood Really Give You a Free Stock?

As of now, yes, traders get a free stock when opening a Robinhood account. To me, it seems like another way the broker tries to entice users. But do your research. Check the terms and conditions, as they can change at any time.

Can You Day Trade Penny Stocks on Robinhood?

Day trading on Robinhood is like pulling onto the highway with two flat tires. You can do it, and it’ll work, but it won’t be pretty. Serious traders tend to use more robust software. Research different brokerages and software to find what might work best for you.

What’s the Catch With Robinhood?

Robinhood has a sleek app, zero commissions, and you can even get a free stock for opening an account. How can that be profitable? They make money by charging what’s known as ‘payment for order flow.’ Market makers and trading firms pay Robinhood for the ability to take the other side of your trades. They make tiny profits on each transaction, which add up over time. And no, they aren’t the only broker to do that.

Robinhood Penny Stocks to Watch: Conclusion

There you have it — my top Robinhood penny stocks to watch in January 2023.

As you can see, Robinhood has some pros and cons just like any other broker or platform. It’s up to you to find your strategy, then find a broker and platform that fits your needs.

If you want to try a more advanced platform, check out StocksToTrade. It’s a platform built by traders for traders and it has a TON of tools and resources that will make even the most experienced traders happy.

Last year, we added our brand-new Breaking News chat feature — and traders are in LOVE with it. See how two skilled stock market pros can help you find the news with the most potential to move stocks. Here’s where you can learn more and sign up TODAY.

Have you used Robinhood to trade penny stocks? I’d love to hear about your experience. Leave a comment below!