Medicare Advantage company Clover Health’s stock (CLOV) - Get CLOVER HEALTH INVESTMENTS CORP Report remains one of the most popular tickers among Redditors. Recently, CLOV investors witnessed considerable volatility after the company released second quarter results that topped expectations, a couple of weeks ago.
Taking the bullish side of the argument today, Wall Street Memes sees two main reasons to invest in the company’s stock.
1# Strong revenue generator
The highlight of second quarter earnings were blowout revenues that landed well above consensus. The $418 million in sales were more than double Wall Street’s expected $208 million, and 140% higher year-over-year. Below are the drivers of last quarter’s robust top line growth:
- Direct Contracting: this segment alone produced $216.4 million in revenues, more than half of the company’s total. The program, which aims to make the Medicare program more financially sustainable for taxpayers while improving health benefits, was launched as recently as the first quarter of 2021 – and already seems to be a promising business.
- Clover Assistant: the AI software platform, which was designed to help physicians improve their services, also helped to drive strong results by attracting new members. According to the company, Clover Assistant is the key differentiator that underpins the unique Clover model, and it has approximately 95,000 lives under management.
2# Short interest is still high
Investing in a stock that is heavily shorted may seem contradictory. High short interest could be the yellow flag that points at a fragile business model, deteriorating fundamentals or overly bullish expectations for future financial performance that may not materialize.
But on the other hand, heavy shorting activity can also mean an opportunity for short term price appreciation, should an uptick in share price force bears to close their positions, leading to a short squeeze. According to Yahoo Finance, nearly 25 million of CLOV shares are shorted out of a float of 198 million, representing a sizable 12% of total shares.
CLOV is one of the most followed tickers among “apes” – members of the massive buy and hold movement that has triggered short squeezes orchestrated primarily on Reddit forums. The CLOV community on Reddit has over 40,000 vocal members.
But even beyond meme mania, many CLOV investors also believe that the company has good-enough fundamentals that justify a long-term investment in the stock.
CLOV investor and stock enthusiast: in your opinion, what are the main reasons to invest in Clover?
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)