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Clover Stock Earnings Review: The Meme Story Is Back

Clover stock jumped higher following the company’s earnings release. Here are some highlights, and what the results could mean for CLOV’s meme saga.

After the closing bell, on February 23, Clover Health delivered a mixed earnings report and encouraging outlook that sent Clover stock  (CLOV) - Get Free Report soaring. Shares climbed as high as 32%, according to Google Finance, but settled up “only” 20% a couple of hours later.

Today, Wall Street Memes looks at the highlights of Clover’s earnings report. We wrap it up by discussing how the current earnings season impacts the company’s meme saga.

Figure 1: Clover Stock Earnings Review: The Meme Story Is Back.

Figure 1: Clover Stock Earnings Review: The Meme Story Is Back.

(Read more from Wall Street Memes: AMC Stock: Here’s Great News For The Movie Industry)

Clover: strong growth, high costs

In Q4 of last year, Clover Health delivered very strong revenue growth of 160% that topped expectations by around $24 million. This was in addition to 44% growth in Q4 of 2020, which underscores Clover’s rapid growth story.

The key driver of revenues also looked good. Total lives covered climbed 124% YOY to 130,000, with the increase being overwhelmingly driven by the 2021 debut of Clover’s direct contracting business.

However, the company also posted a sharp increase in op expenses. After adjusting for a number of items that included reserves and stock-based compensation, normalized adjusted EBITDA was a larger loss than in Q4 of the previous year: $69 million vs. $41 million.

On medical costs, the ratio to medicare advantage revenues remained above 100%, although it improved YOY. Adjusted for items that include COVID-related medical expenses, the non-GAAP ratio of 97%, while still high, was better than the previous year’s by around 130 basis points.

Clover also provided guidance for full-year 2022, including revenue of $3.2 billion that lavishly topped consensus of $2.6 billion. The company also guided for YOY improvements across many other important metrics, including lives covered (guidance for direct contracting has been bumped higher), medical cost ratio and adjusted operating expenses relative to revenues.

CLOV’s meme story continues

Clover’s Q4 earnings report was decent, but one must wonder if it was good enough to justify a massive after-hours spike in share price. More likely at play here are the “meme forces” acting on a stock that has been down an astounding 90% or so from the June 2021 high.

According to Yahoo Finance, CLOV stock had a short ratio of about 10% relative to the float as of the end of January, before shares dipped 22% through late February. This number could have increased ahead of earnings, especially given the widespread bearishness in the market.

Also, Clover has once again become a popular ticker on Reddit — not that it ever completely vanished from retail investors’ radars. The table below shows CLOV’s popularity ranking relative to other momentum stocks and ETFs.

Figure 2: Clover has once again become a popular ticker on Reddit

Figure 2: Clover has once again become a popular ticker on Reddit

Therefore, I think that CLOV’s after-hours jolt may have more to do with popularity, momentum reversal, possible FOMO and even a short squeeze than with business fundamentals. If so, CLOV’s meme story may regain strength in 2022. Keep an eye on this one.

(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)