Clover Health Investments Corp (NASDAQ: CLOV) is headed for the top for the second session in a row after the 20% gains seen on Friday. If you’re on the hunt for press releases or SEC filings surrounding the catalyst for the run, you’re going to be upset. There’s nothing out there.
Nonetheless, there’s a clear reason for the gains.
Retail investors are getting tired of short selling firms who sell stocks short before releasing reports suggesting that the stock will fall. Making a profit as the retail community feels the pain. Here’s what’s going on:
Retailers Attack Short Sellers Over Clover Health
As mentioned above, Clover Health hasn’t issued any news, but it didn’t have to. The retail investing community is banding behind the stock, sending it for gains.
All over social media, we’re seeing messages urging the retail community to dive into the stock after Hindenburg Research announced that it’s expecting to see declines. Unfortunately, Hindenburg’s short of the stock sent it for declines, and the firm continues to urge investors to get out and run, but retail investors aren’t falling for it this time.
There are two factors at play leading retailers to dive in:
- A General Dislike For Short Sellers. First and foremost, big money players like Hindenburg Research and Citron have been making money by pushing significant declines in popular stocks that they’ve taken short positions on. While they’ve made plenty of money in doing so, they’ve left countless retail investors holding the bag. Since the beginning of this year, Wall Street Bets members have been waging attacks on these short selling firms. Sure, one investor isn’t enough to do much, but as retailers work together, they have the ability to send heavily shorted stocks for dramatic gains, giving short sellers a taste of their own medicine.
- Health Plays A Role. At first, we saw concerted efforts to cause short squeezes in companies like Gamestop, AMC, BlackBerry, and others. However, more recently, messages have been hitting social media suggesting that the retail investors pushing these short squeezes should focus on health stocks. After all, they see big firms pushing stocks that represent companies that are creating new medicines and therapeutics that extend life while improving quality as a horrible move. As such, these retailers are getting behind heavily shorted health-related plays, and CLOV stock clearly falls into that category.
There’s Plenty Of Room Ahead
As we’ve seen with other stocks associated with the Big Short Squeeze, short squeezes can send stocks for gains in multiples. While there has been significant movement in CLOV stock, with the retail community getting behind the stock in a serious way, what we’ve seen so far may be nothing more than the tip of the iceberg.
The Bottom Line
The bottom line here is simple. Retail investors are getting tired of big institutions making money by leaving them with losses. So, they’ve decided to work together to give these institutions a taste of their own medicine, and that’s exactly what’s happening with CLOV stock this morning.