Clover Health (CLOV) Stock Rockets As Shorts Get Squeezed

Clover Health Investments Corp (NASDAQ: CLOV) is rocketing in the premarket hours this morning, trading on gains of more than 30% after a similar gain was realized in yesterday’s session. So, what’s the deal?

It seems as though CLOV is being added to a long list of meme stocks a Redditors latch onto what they believe to be an opportunity. Here’s what’s going on:

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CLOV Stock Rockets On Retail Backing

Since the beginning of the year, retail investors have been flexing their muscles, forcing short squeezes on stocks like AMC, Gamestop, BlackBerry, Bed Bath & Beyond, and several other big names. Now, it looks like Clover Health Investments is the next on the list. 

From a short squeeze perspective, CLOV as a target makes sense. The stock has traded with heavy short interest for some time now, and even after yesterday’s run in value, still carries a bit of a short burden. 

Moreover, all over social media, we’re seeing messages about the potential to push hedge funds out and make a significant profit. 

However, the gains represent more than an opportunity. For some time now, Redditors and members of other social platforms that have played a role in various short squeezes have realized their strength when they band together, and seem to be pushing for moves that benefit, not only their pockets, but the world. 

In fact, there has been an uptick in volume of messages surrounding the idea that the retail crowd should focus on heavily shorted stocks in the medical space, pointing to the unethical nature of shorting a stock that represents a company working to extend the length, and improve the quality, of life for patients around the world. 

CLOV fits that bill. 

The company is an insurance company that’s taking an entirely new approach to health insurance, which is making access to quality medical care available for a massive list of customers that simply couldn’t get their hands on insurance otherwise. 

So, while Clover Health is working to improve access to health care, major hedge funds are shorting the stock, hoping to make a profit off of its demise. So, it’s not surprising to see that retail investors are stepping in, working to put a stop the the shorting and lining their pockets with cash in the process. 

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The Bottom Line

For years, hedge funds have manipulated values through short selling, leading to massive losses for retail investors and investors losing faith in good companies. As retail investors continue to band together, targeting stocks that are heavily shorted by the hedge fund crowd, they’re making more of a difference than they think. 

Ultimately, the massive losses being handed to hedge funds in 2021 have been a long time coming, and until they change their act and make moves that are in the best interest of the market as a whole, the market is likely to continue responding by handing them big losses on some of their biggest short positions. 

That’s what we’ve seen with several names, it’s what we’re seeing with CLOV today, and it’s likely to continue for the foreseeable future. 

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