In this article, we will take a look at some of the most shorted penny stocks that currently appear highly attractive with impressive upside potential. On April 23, broader market indices reached new records, with the S&P 500 and Nasdaq closing at their highest-ever levels after President Donald Trump announced that he had extended the United States’ ceasefire with Iran. The move boosted investor sentiment, as the S&P 500 Index rose 1.05% to 7,137, while the Nasdaq Index gained 1.64% to 24,657. The Dow Jones Industrial Average increased by 341 points, representing a rise of 0.69%, closing at 49,490.

According to Ben Fulton, CEO of WEBs Investments, stocks are emerging from the Middle East’s chaos, and it is now time to put geopolitics in the rearview mirror.

Over 80% of S&P 500 firms have exceeded expectations in recent quarterly earnings results. Boeing’s stock surged 5.5% due to lower quarterly losses. GE Vernova jumped almost 14% after exceeding its income goals. Some key performers are Netflix, which emerged as the leading retail trade with a total trading volume of $290 million over five days, and cannabis stocks, which advanced on news of marijuana legalization. ASMI went up by nearly 8% after beating estimates. Oracle gained 3.4% on cloud growth.

With this backdrop, let’s explore our 10 Most Shorted Penny Stocks to Buy.

Our Methodology

To identify relevant stocks for this article, we conducted a sector-agnostic screening of U.S.-listed companies with market capitalizations above $200 million and share prices below $5. We narrowed down our search to include stocks with short interest above 15%. Also, we only shortlisted stocks with at least 25% upside potential, according to consensus, as of the April 23 close. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

10. 1-800-FLOWERS.COM Inc. (NASDAQ:FLWS)

1-800-FLOWERS.COM Inc. (NASDAQ:FLWS) is one of the 10 most shorted penny stocks to buy.

On April 20, 1-800-Flowers.com Inc. (NASDAQ:FLWS) announced a severance arrangement with Thomas Hartnett, its former President, who resigned on February 28, 2026. Hartnett had been serving as a Special Advisor to the CEO since November 3, 2025. He was actively participating in helping the company through transition before he resigned from the job.

Currently, the company is experiencing cash burn, along with a 9.81% decline in topline that amounted to $1.59 billion, during the last 12 months. This resulted in a negative EPS of $3.34 per share. However, there are reasons to be optimistic about the stock.

Back on March 23, Noble Capital raised its rating on 1-800-Flowers.com Inc. (NASDAQ:FLWS) from Market Perform to Outperform with a price target of $3.75. The firm believes that the stock is currently trading at a cheaper valuation relative to its peers.

According to Noble Capital, this appears to be an interesting opportunity for long-term investors if they are willing to look past the near-term low revenue visibility scenario. Such a projection makes it one of the best penny stocks that has lately been heavily shorted.

1-800-FLOWERS.COM Inc. (NASDAQ:FLWS) offers gifts such as floral and fruit arrangements, fresh-cut flowers, greeting cards, personalized products, and more. It also provides food items, which include cookies, wines, candies, and chocolates, to name a few. It uses several online platforms to sell its products, like PersonalizationMall.com, BloomNet, FruitBouquets.com, and more.

9. Virgin Galactic Holdings Inc. (NYSE:SPCE)

Virgin Galactic Holdings Inc. (NYSE:SPCE) is one of the 10 most shorted penny stocks to buy.

On April 13, Goldman Sachs reduced the price target from $4.18 to $3.75 for Virgin Galactic Holdings Inc. (NYSE:SPCE), which still yields more than 28% upside potential at the current level. The firm maintained a Neutral rating on the shares following the company’s fourth-quarter results.

Goldman Sachs is now updating its model based on revised forecasts about margins and revenues. During the quarter, Virgin Galactic also reiterated its plans for its flight-testing program and space flights.

On April 10, Susquehanna increased the price target on Virgin Galactic Holdings Inc. (NYSE:SPCE) from $2.50 to $3, while maintaining a Neutral rating on the stock. The firm implemented this model update alongside a broader first-quarter earnings preview for the aerospace and defense segment.

Susquehanna reflected on the ongoing crisis in the Middle East and highlighted the advanced military capabilities of the United States and the urgent need to rapidly enhance domestic defense industry capacity. The firm has anticipated a significant growth cycle in the sector lasting three to five years.

This enduring structural growth is primarily fueled by heightened geopolitical risks, the ongoing emphasis on the Golden Dome initiative, continuous inventory restocking cycles, and increasing purchasing needs from global partners. This supports our bullish stance towards Virgin Galactic Holdings Inc. (NYSE:SPCE).

Virgin Galactic Holdings Inc. (NYSE:SPCE) is a developer and operator of spaceships and related systems. Its services portfolio includes flight testing, spaceflight operation, manufacturing, development, and post-flight maintenance of spaceflight systems. It provides services to government agencies, private individuals, and researchers.

8. 3D Systems Corp. (NYSE:DDD)

3D Systems Corp. (NYSE:DDD) is one of the 10 most shorted penny stocks to buy.

Some of the recent commercial launches support an optimistic view around the stock. On April 13, 3D Systems Corp. (NYSE:DDD) launched new technology products at RAPID + TCT 2026 in Boston, which will help to scale additive manufacturing for production operations that need high throughput, reliability, and repeatable processes.

Among other things, 3D Systems announced its new SLA 825 Dual, which is a next-generation dual-laser stereolithography that offers over 20% larger build volumes and is also 30% faster in printing than competitive solutions, thereby allowing customers to perform multiple build-ups within a day and even combine more parts on a single platform.

The company also launched AddiTrak, a secure software solution that enables real-time tracking, control, and analytics for 3D Systems production environments, with Industry 4.0 capabilities such as MTConnect and OPC UA. The new product line aligns with 3D Systems’ strategy to provide production-scale additive manufacturing solutions by combining hardware, software, materials, and applications.

CEO Dr. Jeff Graves noted that the investments are delivering production solutions, including stereolithography and software platforms for aerospace, automotive, healthcare, and industrial sectors.

3D Systems Corporation (NYSE:DDD) delivers digital manufacturing and 3D printing solutions. For its 3D printing services, it offers technologies like selective laser sintering, stereolithography (SLA), direct metal printing, MultiJet printing, ColorJet printing, and more. It also offers software platforms called 3D Sprint and 3DXpert. Additionally, it supplies digital design tools, such as scanners, haptic devices, and solutions for simulation, mold and design, production machining, metrology, and more.

7. Absci Corp. (NASDAQ:ABSI)

Absci Corp. (NASDAQ:ABSI) is one of the 10 most shorted penny stocks to buy.

As of the April 23 closing, the stock carries a strongly bullish consensus sentiment. Of the 7 analysts who provided coverage, 6 assigned Buy ratings and 1 gave a Hold call. It has a median 1-year target price of $7.64, leading to an upside of more than 92% at the current level. Such consensus views make for a highly compelling story around this penny stock, which has faced significant short interest recently.

Back on March 24, Absci Corp. (NASDAQ:ABSI) announced an advisory board on endometriosis to help with clinical research in ABS-201, which is their anti-prolactin receptor antibody drug program. These include experts from Yale, Duke, UCSF, and the Mayo Clinic, who will provide insights for the development of this novel antibody treatment.

Endometriosis is a chronic inflammatory disorder that affects about 190 million people across the world. The current therapies available are hormonal therapies, and unfortunately, they do not treat the actual disease itself. With this anti-prolactin antibody, there could be an end to this disorder without affecting one’s ovulation and fertility, since this therapy will target a different pathway.

In an interview, the founder and CEO of Absci, Sean McClain, mentioned that current approved therapies utilize hormone suppression, leaving the patient to choose between either managing her disease or her ability to conceive a child. But ABS-201 treats patients differently from the usual approach. The company is working towards starting its Phase 2 trials by the fourth quarter of 2026, with interim data expected in the second half of 2027.

Absci Corporation (NASDAQ:ABSI) is engaged in the development of several antibody therapeutics. It offers four different types of therapeutics, which include ABS-101, which is in phase 1 of the clinical trial, ABS-201, which is in phase 1/2a clinical trial, ABS-301, and ABS-501. It has partnership agreements with various organizations, including Memorial Sloan Kettering Cancer Center, Oracle Corporation, Advanced Micro Devices, Twist Bioscience, and others.

6. Recursion Pharmaceuticals Inc. (NASDAQ:RXRX)

Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) is one of the 10 most shorted penny stocks to buy.

The stock offers a 100% upside potential at the prevailing level, as of April 23 closing, based on its 1-year median price target of $7. This supports a moderately bullish consensus sentiment, with 1 Buy rating and 2 Hold calls.

Recent developments also back the bullish views on the stock, which has seen a significant amount of short interest lately. On April 17, Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) made an appearance at the Needham Healthcare Conference, where CFO Ben Taylor shared details about the company’s priorities for 2026. The company has entered a phase featuring regular data readouts and partnership milestones following the merger and restructuring completed last year.

Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) has delivered proof-of-concept data on its FAP molecule, with four clinical programs advancing. Over $500 million came from Sanofi, with $60 million from Roche MAP milestones. The Roche deal surpassed $210 million in payouts, while every Sanofi project holds a total of $343 million in milestone possibilities.

There are promising clinical results, with FAP awaiting guidance, and CDK7 combination data to be released in the first half of next year. The company also looks forward to the upcoming results on MALT1 and RBM39, and LSD1 entering the clinic later in 2027. Taylor also reflected on cutting costs by 35% without compromising any projects last year, with the target of keeping costs below $390 million during 2026.

Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) is a clinical-stage biotechnology company involved in drug discovery and development. The company accomplishes this by combining technological advancements across automation, chemistry, data science, and engineering to industrialize drug discovery. Its therapeutic portfolio includes a number of different drugs, such as REC-4881 in phase 1b/2 of clinical trial, REC-3565 and REC-617 both in phase 1/2, REC-4539, REC-7735, and more.

Click to continue reading and see the 5 Most Shorted Penny Stocks to Buy.

Disclosure: None. Follow Insider Monkey on Google News.