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Clover Stock: Popularity Rises In Anticipation of Short Squeeze

With soaring popularity in recent weeks and a bullish technical setup, Clover Health stock investors have been awaiting the short squeeze. Wall Street Memes looks at the upside opportunity.

One of the most popular tickers among retail investors across the main internet discussion boards, Clover Health stock  (CLOV) - Get Clover Health Investments Corp. Report remains a short squeeze target. Currently, CLOV shares are 60% below the peak of early June.

Wall Street Memes looks at some reasons why the short squeeze, followed by a potential rally in share price, may be finally approaching.

Figure 1: Clover Health logo.

Figure 1: Clover Health logo.

(Read more from Wall Street Memes: AMC Stock: What The Smart Money Keeps Missing)

A battleground stock

Clover stock’s popularity is growing week after week. Along with favorite meme stocks GameStop  (GME) - Get GameStop Corporation Report and AMC  (AMC) - Get AMC Entertainment Holdings Inc. Class A Report, CLOV has been gaining notoriety within the main Reddit forums, where it has its own community of over 40,000 followers.

Figure 2: WSB ticker sentiment - CLOV.

Figure 2: WSB ticker sentiment - CLOV.

On September 3, CLOV had a considerable volume of comments. For a few moments, it featured among the top 3 most discussed throughout Reddit. See below:

Figure 3: Trending stocks on Reddit in the past 24 hours (September 3).

Figure 3: Trending stocks on Reddit in the past 24 hours (September 3).

Heavy short interest and bullish technicals

CLOV currently has 15% of its float shorted, according to data from Yahoo Finance, a number that could be high enough to put the stock on the edge of a short squeeze. There has been an increase of 5 million shares shorted, representing almost 20%, from July 29 to August 12.

On the technical analysis, the stock is showing signs that an upside move could happen. Since August 26 (see graph below), the 1-hour bars have formed a cup and handle pattern, which is considered a bullish signal. Generally, this formation can last seven or more weeks.

Figure 4: CLOV stock bar chart.

Figure 4: CLOV stock bar chart.

CLOV: a strong revenue generator

Bullish signs can also be found in the company fundamentals. Blowout revenues were the highlight of second quarter earnings, landing well above Wall Street consensus. The $418 million in sales were more than double analysts’ expected $208 million, and 140% higher year-over-year.

The new Direct Contracting model launched in June and Clover Assistant are at the core of the company’s business model, and the main drivers of Clover’s excellent financial results seen lately.

(Read more from Wall Street Memes: 3 Meme Stocks With Short Squeeze Potential In September)

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(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)