Shares of Clover Health Investments Corp.
jumped after appearing as the ultimate target for retailers on Reddit forums.
The stock price of the health company rose above 90% on Tuesday after jumping 32% on Monday. It is currently buying and selling over $ 22 per share, up from $ 7.64 at the end of last month. More than 125 million shares were traded on Monday, an increase of almost eight times compared to Friday.
Clover Health became public on January 8 through a merger with a special acquisition company or SPAC. Founded in 2013, it provides private health insurance and Medicare plans.
The company’s stock price came under pressure a few weeks later after Hindenburg Research published a report alleging that it had misled investors. Clover Health management then challenged the report. Since then, SPACs have fallen out of favor with investors, as inflation fears have triggered a shift in growth stocks and many have declined significantly.
Some Reddit users have suggested that Clover Health may be a candidate for a short squeeze, which is characterized by a high level of investors betting on falling stocks. If the stock price rises significantly instead, low investors may be forced to buy the stock to cover their positions, which could accelerate the stock up.
Proxy measure for short-term interest, the percentage of shares that are on loan is 9.7%, according to IHS Markit.
Although this has more than doubled since March, it is far below the levels previously seen for stocks like GameStop,,
which was over 80% in January.
This does not deter some Reddit users. “Monkeys who missed $ GME! Listen, $ CLOV is ready to take off! “wrote a user who passes by u / pvr90 on Tuesday. Ape is a nickname for buyers of AMC Entertainment Holdings Inc.
shares, which are among the most actively traded meme shares in recent weeks.
Unlike shares of AMC and GameStop, which rose nearly 2,500% and 1
Others at Reddit are hoping Clover Health will be added to Russell 2000, a widely followed small-cap index, though it’s unclear if that would be enough to support the rise in its stock price.
FTSE index provider Russell adjusted the components of its indexes on June 25. The company said 38 new companies would be added to Russell 2000, with 21 classified as healthcare. Funds that mimic widely followed indices will have to buy stocks added to the index.
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