It’s been said that only a few variables really count when it comes to trading stocks. Everything else is just noise. If that’s true, then stock float is one of our favorites. Why? Because a low float can help send a stock price soaring – especially when combined with a fresh news release or announcement that piques stock traders’ interest. When the float (or the number of shares available for trading) is low and demand is high, rapid moves in a stock’s price can occur.
If you’ve spent any time dabbling with investing or trading, you’ve probably come across a story about a stock that seemingly came out of nowhere and went parabolic!
For example, let’s take a look at the stock of Bio-Path Holdings, Inc. (BPTH). BPTH is a small biotech company that develops cancer therapies. It started off 2019 with a stock price below $5. Then on the morning of March 6, 2019, the company issued a press release touting positive results for one of its treatments. Around that time the stock float was below 1 million shares. As the chart shows, the combination was explosive.
After rising in the premarket session, BPTH opened at $7.45 and reached a high of $14.60 before closing the day at $12.02. That’s a one day return of over 60%! And throughout the day the stock provided plenty of opportunities for traders to grab some of those gains.
But the real fireworks happened the next day when BPTH opened at $18.20 and reached a high of day of $73.52 by the late morning. That’s a 300% gain in the span of 2 hours! Wild!
Next let’s look at the crazy ride of SPI Energy Company (SPI). In September 2020 the company traded on the NASDAQ with a float of around 10 million shares. Then on September 23, SPI announced it was launching a new electric vehicle subsidiary. That immediately got the stock moving in premarket trading. The stock opened the day at $3.54 and eventually made an intraday high of $46.67 before closing the day back down near $14. That’s a one day swing of over 1200%!
The same can happen with stocks that have a float above a few million. Check out the stock of Eastman Kodak Company (KODK). Widely known for its camera brand, an announcement came in late July 2020 that the company received a $750+ million government loan to speed up domestic drug production in the U.S. The float at the time was somewhere between 8 and 22 million shares depending on which website you checked. The loan news catalyst pushed the stock price up from $2.62 to a morning high of $11.80. That got the attention of investors and short sellers alike, igniting a powder keg the next day. As the chart shows, the stock opened on July 29, 2020 at $18.43 and made a high of day of $60. An incredible 225% gain!
You can research many other examples of such impressive stock moves yourself. While these extreme events are atypical and rarely occur day to day in the stock market, they do show the potential opportunities in low float stocks. And, of course, we never consider such run ups as long term investments. Stocks like BPTH, SPI and KODK quickly came back down in price. But nearly every day there’s a less dramatic instance of a low float stock that provided some opportunity for a quick profit. While we don’t profess to know the reasons behind these stock moves, we do believe that traders will continue to be on the hunt for low float stocks that are releasing something newsworthy which could help push share prices higher. When that happens, we want to join the ride!
So we developed FloatChecker as a quick way to compare a stock’s float across multiple popular financial websites. Just enter a ticker symbol and view the results. It’s that simple. FloatChecker is free and there’s no registration required, but do take the time to compare the listed premium services and decide whether any of them are right for you.
We wish you good fortune on your trading journey, and don’t forget to check the float … with FloatChecker!