Clover Health (CLOV) Stock Continues Skyward

Clover Health Investments Corp (NASDAQ: CLOV) is having yet another incredible day in the premarket hours this morning, gaining more than 20% before the bell. The gains come after a more than 80% gain yesterday as retail investors continue to squeeze the shorts. 

Nonetheless, there seems to be more to the conversation than a short squeeze. Here’s what’s happening:

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Here’s Why CLOV Is Climbing

Ultimately, there are three reasons for the tremendous gains that we’re seeing in Clover Health:

  1. Short Squeeze. First and foremost, the stock has been a target for short sellers, who have kept a cap on growth. Recently, retail investors have realized that when they work together, they have the ability to tip the scales of supply and demand, resulting in short squeezes that push the stock for massive gains. Considering the short interest on the stock, it’s clear that short sellers are being squeezed here. 
  2. Russell 1000. Another factor that seems to be driving the stock for the top is the fact that the Russell 1000 index seems to be picking up quite a few companies in this arena, and there’s no reason for CLOV not to be picked up. If this happens, the news could send the stock for further dramatic gains. After all, should the stock be added to the Russell 1000, every institutional investor that manages an index fund or ETF based on the index will have to purchase shares to stay in line with their investment strategy. This could lead to increased demand ultimately pushing the stock further up. 
  3. Social Activity. Yesterday, Clover Health was one of the most talked about stocks on social media, joining the crowd of meme stocks. These are companies that benefit greatly from social awareness as the retail community gets behind them. 

So, all together, there’s no real news out of the company, but there doesn’t have to be. What we have here is a company that’s been battered and held down by short sellers and a massive group of retail investors that are putting their foot down. 

It’s a match made in heaven.

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The Bottom Line

The bottom line here is simple. CLOV stock is yet another stock that has been battered by short sellers, but has quite a bit going for it. As a result, retailers are getting behind the ticker, causing a big boom. Moreover, should the Russell 1000 pick up the stock, the gains we’ve seen so far will be more like the tip of the iceberg, making it one that’s hard to ignore. 

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