Investors Need To Be Careful About Clover Health’s Stock Volatility

SPACs have been all the rage over the past 12 months, and Clover Health could be the stock that overshadows the rest.

Feb. 1, 2021

Among the weeds of uncertainty that the Reddit v.s. Hedge Funds battle sprung last week, many truly exciting companies with a lot of potential found themselves entangled.

Good, albeit risky, long-term buys such as iRobot and Clover Health have experienced unwarranted volatility due to their higher-than-usual volume of short-sellers. It is about the latter, Clover Health (NASDAQ: CLOV), which we will speak about today. 

Debuting on the Nasdaq on January 8th following a merger with Chamath Palihapitiya-backed SPAC, IPOC, Clover Health is on a mission to disrupt the healthcare industry.

What makes Clover stand out?

Clover Health is a healthcare technology company with a deeply-rooted mission of helping its members live their healthiest lives. Clover uses its proprietary technology platform to collect, structure, and analyze health and behavioral data to improve medical outcomes and lower costs for patients.

Ok, so the healthcare industry may not be as exciting as Chamath’s space or real-estate ventures, but it definitely has the largest total addressable market, with the U.S. healthcare industry totaling a value of close to $4 trillion. And there are many reasons why Clover Health can stand out:

  • Clover is operating its Medicare Advantage platform in just seven states — lots of room to grow.
  • It boasted 57,315 members and revenue of $507 million through the first nine months of 2020 — a 46% increase from 2019.
  • It is flush with $1.23 billion in cash after its IPO, an ample war chest to fund growth. 
  • A lot of faith from executives. Chamath owns 30% while CEO Vivek Garipalli owns close to 37%.
  • Clover has the backing of both Google and Sequoia Capital

Why do you need to know this today? 

Because Clover Health looks primed to get caught up in the current volatility. It has become one of the most-talked-about stocks on Fintwit and Reddit, with many popular retail investors on these sites encouraging their followers to hold their positions in $CLOV and buy more if possible. Robinhood even added Clover Health to its list of 50+ restricted stocks — a move that is adding fuel to the fire for retail investors on the platform — but it looks set to be reinstated to normal trading rules today.  

With the situation not looking likely to cool off any time soon, Clover Health is going to go through the motions, so it is important for investors to ignore this noise and focus on the long-term vision of the business, not the share price.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here