Clover Health Investments, Corp. (CLOV) stock prices soared by a significant 32.44% as of the market closing on June 7th, 2021, bringing the price per share up to USD$11.92 at the end of the trading day. After-hours trading saw the stock climb by another 8.22%, bringing it up to USD$12.90.
Recent Woes
This comes in spite of recent allegations against the company’s leadership that they may be hiding government investigations from the public. January 7th, 2021 saw the closing of the company’s merger with SCH III, with CLOV continuing as the legal successor. February 4th, 2021 saw the company being targeted by a scathing report from the independent Hindenburg Research firm, resulting in the stock price plummeting. CLOV went on to announce it was under investigation by the SEC, causing the stock to further crash around the middle of May 2021.
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Pandemic Resurgence
The stock rose by more than 30% on June 7th, 2021, owing largely to the meme-stock phenomenon, of which the popular social media site Reddit is a major driving force. Despite experienced financial experts warning against the risk of investing in stocks that lack a fundamental basis for being invested in. Nevertheless, several meme stocks have been kept afloat by the horde of retail investors who are a part of the Reddit movement.
Prolonged Suffering
With the global economy having been in shambles for more than a year, many were hoping that government stimulus cheques, universal immunization, and the lifting of Covid-19 restrictions would drive the resuscitation of the economy. Instead, economies have continued to suffer, with employment being devastatingly affected, with consumers who have spending power being afraid to spend because of incoming inflation.
Interest Rates
To facilitate the return of many Americans to the national workforce, the Federal Reserve has indicated its willingness to entertain inflation rates higher than its 2% target as it tries to use an easy money policy. Lower interest rates in conjunction with the pandemic resulting in certain segments of an otherwise failing economy becoming unprecedently promising have resulted in increased involvement in riskier trading, of which meme stocks are a part.
Future Outlook for CLOV
Armed with the influx of capital generated from the soaring of its stock price, CLOV is no doubt grateful for the meme stock phenomenon during the course of the pandemic. The company is hopeful its legal matters will be resolved satisfactorily, and it can use this fortuitous boost to propel itself to unprecedented heights. Current and potential investors are hopeful that management will continue to leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
