- Clover Health Investments (CLOV) stock is no longer just a meme stock.
- Clover’s financial health is improving.
- Investors can safely consider Clover Health a buy and accumulate CLOV stock for longer-term positioning.
This year has been a tough one for most stocks. But smaller capitalization plays like Clover Health Investments (NASDAQ:CLOV) stock, which are typically at larger risk when market conditions are challenging, have been hitting even harder than most.
As bad as it has been for Microsoft (NASDAQ:MSFT) or Tesla (NASDAQ:TSLA) and other dominant large-cap companies this year, that stock pressure pales in comparison to the bearish price action in fuboTV (NYSE:FUBO), Skillz (NYSE:SKLZ) and many other small-cap companies struck down over the past year and change. Again, that includes CLOV stock.
For its part CLOV shed as much as 93% from its February 2021 all-time-high. And let’s just say it has plenty of company that’s equally miserable. But that type of pain extends far beyond small-cap de-risking.
At the heart of the matter for Clover Health and its other immediate downtrodden peers, is CLOV stock’s inclusion into the mostly tainted world of meme stocks. But can Clover turn over a new leaf worth buying into or are shares closer to a last rites situation that’s best to avoid?
|CLOV||Clover Health Investments||$2.94|
CLOV Stock’s Meme Stock Origins
When Clover Health burst onto the scene as a post special-purpose acquisition company (SPAC) in early 2021, there were reasons to be upbeat about CLOV stock and the company’s chance to be one of the market’s next big things.
First, shares of CLOV were brought to market by well-known investor Chamath Palihapitiya and his Social Capital Hedosophia funds. The story of being able to invest in a next-gen, public Medicare platform sounded compelling. The healthcare system, or any piece of it, needed to be fixed, right?
Further, the SPAC deal and what had once been a sleepy backwater means of bringing shares to market was taking Wall Street by storm.
From the get-go, however, Clover shares harbored larger short interest betting against its ability to have a sustainable business. At the same time, more aggressive investors on social media and trading platforms like Reddit’s r/WallStreetBets and Robinhood Markets (NASDAQ:HOOD) looked to prove CLOV stock’s bears wildly wrong. CLOV was not only a SPAC stock, but 100% a battleground meme stock.
And for the vast majority of those companies, there has been a huge price to play with that inclusion.
Reddit’s Bulls Have Less Say in CLOV Stock Matters These Days
To be fair, being a meme stock wasn’t a bad position to be in as CLOV stock was listed on the Nasdaq in early January 2021. GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) are proof of that, as those stocks rocketed higher in a meme movement that was really just taking hold.
But after a huge, short squeeze in June, the Reddit meme stock trade was already showing systemic wear and tear amid a growing risk-off environment. Add to that the fact that CLOV reported wider-than-expected losses as a publicly-traded company, and the bears managed to take shares to the woodshed.
But today it’s largely a different chapter for CLOV stock. Rightfully, the meme stock association can mostly be removed from Clover Health.
For one, shares are down to fairly modest short interest of about 6%. Further, all that prior, overly bullish chatter has been muffled. According to quiverquant.com, Reddit mentions fell to just one mention at last count in CLOV stock by Thursday’s close.
What’s more, while Clover’s most recent quarterly report in late February revealed a company on the mend, items like stronger-than-expected revenues, critical and bullishly trending medical care ratio (MCR), as well as full-year sales guidance above Street views , could pave the way for a much stronger stock price.
CLOV Stock Takeaway
Thankfully, there’s less worry about what others are saying or making mention of with regards to CLOV stock, as shares fetch just $1.5 billion. And again, Clover Health appears to be making strides in the right direction toward a lasting and profitable business.
Today, the biggest purchasing challenge of CLOV stock and expecting immediate gratification is probably the broader risk-off against trade hanging over the market. But I’d still consider this a decent enough spot to buy a smaller position.
Ultimately, for investors interested in owning the next chapter in Clover Health at a measurably more attractive price, any future opportunities to purchase shares on weakness looks attractive for accumulating CLOV stock without having to worry about using a price chart as guidance.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.