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    Clover Health Stock: Why is it moving up?

    Victor Lei β€” Head of Research

    June 9, 2021

    Clover Health Stock

    June 9, 2021

    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 β€” its stock dropped 60% in the following months.

    How’s Clover doing? In May, Clover reported an unimpressive 1st quarterΒ  β€” 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 β€” 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 β€” 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 β€” see WSB Trackers.

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