Clover Health Hops On Reddit Ride As Latest Meme Stock

Employers remain committed to health care for their workers, but still are concerned about costs.

Clover Health (CLOV) saw its shares surge over 20% in premarket trading early Wednesday morning after a number of Reddit investors took a major interest in the healthcare company.

Clover’s wild ride first started on Monday, when the company shares jumped 32%, and then again on Tuesday as it closed for trading up over 85% to $22.15 per share, with highs of 109% throughout the day, The Wall Street Journal reported.

Prior to the Reddit interest, Clover’s daily trading volume was typically below 10 million, a stark contrast to Tuesday’s volume of more than 700 million, CNBC said.

As of Tuesday, more than 40% of Clover’s stock was sold short, according to S3 Partners, as reported by CNBC. The short sale is positioning the company for a short squeeze, which is appealing to retail traders and is being predicted by some Reddit users, the WSJ said.

In this scenario, if the share price rises further, some investors of the stock may be forced to buy shares to cover their short positions. This could accelerate the upward momentum, causing the short squeeze, according to the WSJ.

However, previous Clover has struggled with its share prices after a short-seller report from Hindenburg Research was released in February. The report alleged that it misled investors. Clover denied the allegations.

Clover is one of several companies that have ridden the Reddit wave as of late. GameStop, AMC Entertainment, and earlier this week, Wendy’s have all seen their stock price surge after Reddit traders backed the stocks in the investor community.

Clover, which filed for an IPO in January 2020 through a SPAC deal involving billionaire venture capitalist Chamath Palihapitiya, has seen its stock rise 146% on the week through Tuesday’s close, CNBC said.

The company offers private health insurance and Medicare plans in eight states, including Arizona, Georgia, Mississippi, New Jersey, Pennsylvania, South Carolina, Tennessee, and Texas.

Shares of Clover Health were trading at $27.27 as of premarket hours on Wednesday, up $5.12, or 23.12%.