Clover Health soars 49% as ‘meme stock’ rally powers on

An AMC theater is pictured amid the coronavirus disease (COVID-19) pandemic in the Manhattan neighborhood of New York City, New York, USA, 27 January 2021. REUTERS / Carlo Allegri / File Photo

Stocks of Clover Health Investments Corp. (CLOV.O) rose 49% on Tuesday as it became the new center of attention for small retailers on social media platforms, which have sparked staggering rallies in heavily short US stocks this year.

The so-called “meme stick” phenomenon that was created with video game retailer GameStop Corp. started (GME.N) in January and to the cinema operator AMC Entertainment Holdings Inc (AMC.N) in May, the US Securities and Exchange Commission initiated a search for evidence of market manipulation. Continue reading

Medicare-backed insurance seller Clover and electric truck maker Workhorse Group Inc (WKHS.O) are among the most commonly shorted stocks on the US stock exchanges, with Clover being the target of short seller Hindenburg in February. Continue reading

“The WallStreetBets forum (on Reddit) identified over 30% short stakes (shares with),” said Thomas Hayes, executive member of Great Hill Capital Llc in New York.

Clover’s backer, venture capitalist Chamath Palihapitiya, brought the company public in October 2020 through a reverse merger with its $ 3.7 billion blank check firm.

Clover’s stock most recently rose 49% to $ 17.74 after previously hitting a record high of $ 18.92.

The company’s options have seen an upward trend in the past few days, with trading volume rising to 587,000 contracts on Monday, compared to an average daily volume of under 50,000 contracts for the month of May, Trade Alert data showed.

Call options, which speculated that the stock would climb as high as $ 30, have been among the most heavily traded contracts in the past few days.

Clover’s 30-day implied volatility, an options-based measure of how much traders expect the stock to fluctuate in the near future, was 176%, up from 93% at the end of May, according to Trade Alert data.

Workhorse stocks rose 10.0% while AMC and GameStop rose 4.9% and 11.0%, respectively.

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