We recently started a series called “Penny Stock of the Day”. These ideas are geared towards traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Cineverse Corp. (NASDAQ: CNVS)
Today’s penny stock pick is the streaming technology and entertainment company, Cineverse Corp. (NASDAQ: CNVS).
Cineverse Corp. owns and operates streaming channels. It also operates as an aggregator and distributor of feature films and television programs; a proprietary technology software-as-a-service platform for over-the-top (OTT) app development and content distribution through subscription video on demand (SVOD), dedicated ad-supported (AVOD), and ad-supported streaming linear (FAST) channels, as well as social video streaming services and audio podcasts.
In addition, the company operates MatchpointTM, a software-based streaming operating platform. Further, it distributes products for brands such as Hallmark, ITV, Nelvana, ZDF, Konami, NFL, and Highlander brands, as well as for content creators, movie producers, television producers and other short-form digital content producers; and sells physical products, such as DVDs and Blu-ray discs. The company provides its services through direct-to-consumer channels, application platforms, and third-party distributors of content on platforms. The company was formerly known as Cinedigm Corp. and changed its name to Cineverse Corp. in May 2023.
Website: https://www.cineverse.com/
Latest 10-K report: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001173204/b5a19a38-3ea9-4130-85d3-60125c85e15b.pdf
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for CNVS in the last 3 months, the stock has an average price target of $7.50, which is nearly 260.6% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company’s acquisition of IndiCue for $22 million (cash and stock) integrates CTV monetization into the Matchpoint platform. This could accelerate tech revenue, and may soon become majority.
- CNVS’s films like The Toxic Avenger Unrated are exceeding expectations with 40%+ IRR; the upcoming releases ( two movies, Terrifier) may sustain the momentum.
- Rumors of an interest around MicroCo, a 50/50 joint venture focusing on “micro-dramas”—a multi-billion-dollar emerging market in short-form streaming.
- Potential for short squeeze.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out from the falling wedge pattern with high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
CNVS – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines.
#3 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink dotted line. This looks like a good area for the stock to move higher.
CNVS – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CNVS is above the price of $2.60.
Target Prices: Our first target is $4.10. If it closes above that level, the second target price is $5.50.
Stop Loss: To limit risk, place a stop loss at $1.70. Note that the stop loss is on a closing basis.
Our target potential upside is 58% to 112%.
For a risk of $0.90, our first target reward is $1.50, and the second target reward is $2.90. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses.
CNVS – Consolidated Statements of Operations
- CNVS’s Q2 FY2026 revenue fell 3% YoY to $12.4 million, missing expectations by about $500,000, driven by legacy distribution issues and timing of licensing deals.
- The company recently priced a $3.0 million public offering (Feb 12, 2026) and issued $13 million in convertible While this funds acquisitions, it dilutes existing shareholders and adds debt at a 9% interest rate.
- Despite being a loss-making company, the executives are being paid significant compensation.
CNVS – Executive Compensation
- This stock is a high-risk play. The Q3 FY2026 earnings report is scheduled for February 17, 2026, after market close. High volatility is possible tomorrow as investors digest updated cash levels and the IndiCue integration plan. If the earnings report reveals further cash depletion or if the market reacts poorly to the recent $3M share dilution, the stock may drift back toward its support levels.
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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Source: Trades of the Day
