Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • Updates
  • disruptive innovation

Clover Health is the next meme stock, should I watch CLOV shares?

The meme stock craze is only getting bigger. AMCGameStopBlackberry, and now new SPACs are getting caught up in the short-squeeze action. 

This article was originally written by MyWallSt. Read more market-beating insights from the MyWallSt team here.

On Monday, Clover Health (NASDAQ: CLOV) stock rose 32%. Shares were up as high as 83% today, before falling 30% just one hour later, after the stock emerged as the latest target for traders following r/WallStreetBets. Shares are being bought and sold for over $18 currently after only being valued at $7.64 at the end of May. A staggering 125 million shares were traded on Monday, 8x as many as on Friday.


What is Clover Health? 

Clover Health was founded in 2013 and provides health insurance and Medicare plans. The firm made its market debut back in January by merging with a special-purpose acquisition company (SPAC) also referred to as black-check company. 

What Is The Difference Between An IPO And A SPAC?

Recently, the company’s share price has been put under pressure after Hindenburg Research released a report alleging that the company misled investors. Read more on the scandal here: Clover Health’s Stock Plummets Following Hindenburg Short-Seller Report

The firm claimed the allegations were false but since then SPACs have lost their popularity with investors over inflation concerns. Now, the stock has become a candidate for a short-squeeze. This happens when a stock has a high level of short interest (sellers betting on the stock to fall) and so if the stock rises dramatically, short-sellers have to buy back the stock to cover their positions, which accelerates the stock even further.  


Is Clover Health a good investment?

The company’s first-quarter earnings weren’t good enough to stop short sellers betting against the stock. Clover Health posted record revenue of $200 million for Q1, up 21% year-over-year and announced that its new traditional Medicare insurance offering should reach between 70,000 to 100,000 members by the end of 2021.

The cause of the drop in its share price came earlier this year when the media reported that the medical insurance was under federal investigation for how it compensates physicians for using its software.

The main argument for Clover Health is its long-term potential and many experts predict the company will disrupt and improve the healthcare and insurance sector, which it definitely has the money to do.

However, with more than one-third of Clover Health shares being sold short, investors can expect further volatility as it’s now one of Reddits favourite meme stocks.  


MyWallSt gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team posts daily insights, subscriber-only podcasts, and the headlines that move the market. Start your free trial now!


Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

Latest articles