Clover Health Pops 7% Amid Renewed Hopes for a Short Squeeze

Clover Health has seen its value nearly halved this month after racing up to more than USD 22 only to fall back to USD 12. Investors will take today’s gains of more than 7%, however, as they place bets that the bulls will maintain control.

Today’s gains come after company management in an SEC filing attributed volatility — including price spikes — in the stock to a “short squeeze.” That was all Reddit members needed to hear, and now they say they are waiting for an “explosion” in the stock. Short interest currently hovers at 26%, as per Fintel.io, and continues to stay in the double-digit percentage range. By way of comparison, GameStop’s short interest is now 23%.

Clover stock nearly touched on USD 14 today but has since pulled back from its best level of the session. Investors have nothing to complain about, however, and some are kicking themselves for not piling on more shares before today’s rally.

Clover Calls

According to reports cited by swing trader Maria Chaudhry, who has 14,200 followers on Twitter, call volume on Clover is higher than usual and going in a bullish direction. The report suggests there are close to 130,400 call contracts currently trading, surpassing expectations threefold with implied volatility on the rise. The most active contracts are 6/25 weekly calls at USD 13 and USD 14.

Meme Stock Mania

Clover Health might not be the first meme stock, but it is gaining popularity. The health insurer, which brings tech innovation to Medicare Advantage plans, was the product of a SPAC early in the year. Clover is backed by venture capitalist Chamath Palihapitiya, who has seen his USD 16 million investment balloon to as much as USD 682 million thanks to stock’s fame among retail investors.

Investors have held on for dear life as the stock has taken them on a roller coaster ride this year. Clover is expected to report its Q2 earnings in August, at which time the company will reveal whether it can rally on its own merits. It has to turn the ship around from a Q1 loss and revenues that failed to impress. Otherwise, the stock price could return to where it left off before the meme-stock mania, and that was in the single-digit range.