Speculative Stock: Houston American Energy (HUSA)
Posted: Thu Jun 19, 2025 1:02 amSpeculative Stock: Houston American Energy (HUSA)
I want to tell you about a super OVERVALUED STOCK so that you AVOID buying it. In fact, for the right person, I think this is an excellent stock to sell short and bet on the price going down, not up. First, you absolutely must have a margin account (needed to borrow) to sell short stocks. If you only have IRA's, Roth IRA's and other cash accounts, this message is likely a waste of your time.
Why is this so overvalued? The company recently did a reverse split. This is often done by stocks with heavy debt that might be on the verge of bankruptcy.
First, let me discuss the normal forward split. A normal split which is, say, 2:1 means that you have twice as many shares at half the price. For instance, it is like having two $10 bills instead of a $20 bill. Companies often do this when stock prices go over $100 a share to make them more affordable for the average person.
The reverse split is often done by companies whose stocks have dropped below, say $1-2 a share. The company is faced with the likelihood that their stock will be delisted, or kicked off the stock exchange, if the price stays too low for too long. Bankruptcy is another distinct possibility for many.
Well, Houston American did a 1:10 reverse split on June 9th. This took the stock from 43 cents a share to $4.39. Of course, this meant that there were 1/10 the amount of shares available, so only about 1.5 million shares instead of 15 million. Some people who like to play the wild moves these stocks can have would argue that the stock is easier to move (manipulate according to some) up and down.
As a result of what I just said, the moves these can have shortly after doing reverse splits can be quite sizable over the short term.
HUSA went from $4.39 on June 9th to $24.47 on June 17th. Keep in mind that nothing about the company really changed. This is merely an accounting entry like giving you a $10 bill for ten $1 bills.
If you want to see three other recent reverse splits which spiked sharply only to plummet sharply very quickly, here you go:
MULN (Mullen Automotive)
SBET (SharpLink Gaming)
YHC (LQR House)
Let me give you a few more reasons the company is one to consider selling short:
1) The company only has 2 (yes, just 2) employees. That's smaller than my family!
2) The company lost a lot of money in the past 12 months and has lost money each of the last 15 years. How much longer can this go on without declaring bankruptcy?
3) This is not the first, but at least the SECOND reverse split they've done. Back in July, 2011 the stock was $2,612.50 a share. Wednesday it closed at $17.50, which is only about 2/3 of 1% of the 2011 price. Ouch!!!
4) CEO Peter Longo came out in the past few days and said that he basically had no idea why the stock spiked from $4.39 to $24.47 in just 5 trading days. This was done in writing, which is basically a polite way of saying "I can understand why people would want to bet on our stock going down."
5) The company just came out Wednesday morning and said they are selling 223,762 shares of common stock to some institutional investor for $10.60 a share. Since the stock was $24.47 on Tuesday, that is another way of politely saying that even Wednesday's close of $17.50 was overvalued. If not, they would have gotten substantially more than just $10.60 a share for it.
Note that this energy company can be volatile because of unrest with the Israel/Iran situation in the Middle East. So I could see it perhaps spiking to maybe even $40-50 a share very briefly before plummeting to a more realistic value. This problem with trying to buy an already overvalued stock is that news can come out overnight that causes the stock to open the very next day much lower than where it was the day before. That's why I'd rather bet on an overvalued stock going down, not up. I can easily see this stock having a single digit price in the next 2-5 trading days and be as low as $5-6 a share in perhaps 2-3 weeks. Not a bad return for those who can stomach the volatility!
DISCLAIMER: If you decide to play this one somehow, please realize it is highly speculative. This is NOT a blue chip investment of any kind. This is more likely gambling money. If you want to try selling short for the first time, you might try selling short a very small number of shares (like perhaps 100 shares in an account worth $100,000) to get a feel for the process of selling short and how it works. Your brokerage firm will likely charge some kind of fee (should be pretty nominal right now (perhaps $4-8 or so) for HUSA) to loan you the shares. Other times the fees can be really stiff, even a few hundred dollars a day for some stocks.
Good luck to all. This is one of the more obvious overvalued stocks I've seen in a while. But, let me remind people about what happened when a Canadian investor named Roaring Kitty was hyping GameStop (GME) stock in late 2020. Note that GME did a 4:1 stock split on 7/22/22, so prices you see now need to be adjusted for that split. On 12/14/20, GME stock was as low as $12.16 a share. On 1/28/21 the stock hit an all-time high of a whopping $483.00. So, yes, a stock that was being hyped by a foreigner went from $12.16 to $483.00 in just 45 days!
On 2/19/21 (just 16 trading days after hitting the high) it hit an intraday low of $38.52. It was down a whopping 92% in just about 3 weeks. At one point it was so volatile that Robinhood wouldn't let clients buy more than 1 single share of GME- it was THAT WILD! Please be super careful when trying to figure out how to play this stock or any wild meme stock.
I want to tell you about a super OVERVALUED STOCK so that you AVOID buying it. In fact, for the right person, I think this is an excellent stock to sell short and bet on the price going down, not up. First, you absolutely must have a margin account (needed to borrow) to sell short stocks. If you only have IRA's, Roth IRA's and other cash accounts, this message is likely a waste of your time.
Why is this so overvalued? The company recently did a reverse split. This is often done by stocks with heavy debt that might be on the verge of bankruptcy.
First, let me discuss the normal forward split. A normal split which is, say, 2:1 means that you have twice as many shares at half the price. For instance, it is like having two $10 bills instead of a $20 bill. Companies often do this when stock prices go over $100 a share to make them more affordable for the average person.
The reverse split is often done by companies whose stocks have dropped below, say $1-2 a share. The company is faced with the likelihood that their stock will be delisted, or kicked off the stock exchange, if the price stays too low for too long. Bankruptcy is another distinct possibility for many.
Well, Houston American did a 1:10 reverse split on June 9th. This took the stock from 43 cents a share to $4.39. Of course, this meant that there were 1/10 the amount of shares available, so only about 1.5 million shares instead of 15 million. Some people who like to play the wild moves these stocks can have would argue that the stock is easier to move (manipulate according to some) up and down.
As a result of what I just said, the moves these can have shortly after doing reverse splits can be quite sizable over the short term.
HUSA went from $4.39 on June 9th to $24.47 on June 17th. Keep in mind that nothing about the company really changed. This is merely an accounting entry like giving you a $10 bill for ten $1 bills.
If you want to see three other recent reverse splits which spiked sharply only to plummet sharply very quickly, here you go:
MULN (Mullen Automotive)
SBET (SharpLink Gaming)
YHC (LQR House)
Let me give you a few more reasons the company is one to consider selling short:
1) The company only has 2 (yes, just 2) employees. That's smaller than my family!
2) The company lost a lot of money in the past 12 months and has lost money each of the last 15 years. How much longer can this go on without declaring bankruptcy?
3) This is not the first, but at least the SECOND reverse split they've done. Back in July, 2011 the stock was $2,612.50 a share. Wednesday it closed at $17.50, which is only about 2/3 of 1% of the 2011 price. Ouch!!!
4) CEO Peter Longo came out in the past few days and said that he basically had no idea why the stock spiked from $4.39 to $24.47 in just 5 trading days. This was done in writing, which is basically a polite way of saying "I can understand why people would want to bet on our stock going down."
5) The company just came out Wednesday morning and said they are selling 223,762 shares of common stock to some institutional investor for $10.60 a share. Since the stock was $24.47 on Tuesday, that is another way of politely saying that even Wednesday's close of $17.50 was overvalued. If not, they would have gotten substantially more than just $10.60 a share for it.
Note that this energy company can be volatile because of unrest with the Israel/Iran situation in the Middle East. So I could see it perhaps spiking to maybe even $40-50 a share very briefly before plummeting to a more realistic value. This problem with trying to buy an already overvalued stock is that news can come out overnight that causes the stock to open the very next day much lower than where it was the day before. That's why I'd rather bet on an overvalued stock going down, not up. I can easily see this stock having a single digit price in the next 2-5 trading days and be as low as $5-6 a share in perhaps 2-3 weeks. Not a bad return for those who can stomach the volatility!
DISCLAIMER: If you decide to play this one somehow, please realize it is highly speculative. This is NOT a blue chip investment of any kind. This is more likely gambling money. If you want to try selling short for the first time, you might try selling short a very small number of shares (like perhaps 100 shares in an account worth $100,000) to get a feel for the process of selling short and how it works. Your brokerage firm will likely charge some kind of fee (should be pretty nominal right now (perhaps $4-8 or so) for HUSA) to loan you the shares. Other times the fees can be really stiff, even a few hundred dollars a day for some stocks.
Good luck to all. This is one of the more obvious overvalued stocks I've seen in a while. But, let me remind people about what happened when a Canadian investor named Roaring Kitty was hyping GameStop (GME) stock in late 2020. Note that GME did a 4:1 stock split on 7/22/22, so prices you see now need to be adjusted for that split. On 12/14/20, GME stock was as low as $12.16 a share. On 1/28/21 the stock hit an all-time high of a whopping $483.00. So, yes, a stock that was being hyped by a foreigner went from $12.16 to $483.00 in just 45 days!
On 2/19/21 (just 16 trading days after hitting the high) it hit an intraday low of $38.52. It was down a whopping 92% in just about 3 weeks. At one point it was so volatile that Robinhood wouldn't let clients buy more than 1 single share of GME- it was THAT WILD! Please be super careful when trying to figure out how to play this stock or any wild meme stock.