Clover Health Stock: Why is it moving up?
Clover Health stock, the health insurance and Medicare provider, jumped over 50% thanks to, who else but, WallStreetBets.
What’s the big deal? Clover Health is the latest target of the infamous Reddit community that sent AMC flying last week. The company had a couple controversial months leading up to the recent spike:
- In Jan, the famous investor Chamath Palihapitiya, responsible for the IPOs of Virgin Galactic, SoFi and others, took Clover Health public
- Weeks later, Hindenburg Research put out a report blasting the company for fraud and misleading investors.
- As a result, the Department of Justice launched an investigation into Clover — its stock dropped 60% in the following months.
How’s Clover doing? In May, Clover reported an unimpressive 1st quarter — growth slowed from 66% in the previous quarter to 18%, along with a drop in profitability margins.
But the entire insurance technology industry struggled in recent months.
- After seeing tremendous gains in 2020, insurtech stocks fell hard alongside growth and speculative stocks in Feb’s crash.
- Only in May, did they start recovering — Lemonade (NYSE:LMND) is up 45% and Oscar Health (NYSE:OSCR) is up 26% in the past month.
Looking forward: Meme stocks are playing a bigger role in today’s stock market — so be prepared. It’s important for investors to realize when they’re holding on to something driven up by online communities.
If you are, then it’d be a good time to evaluate whether to sell and take some money off the table.
Several sites tracking stock trends among online communities popped up in recent months — see WSB Trackers.