Shares of Clover Health Investments (CLOV 1.85%) ended 12.8% lower as of the market close on Tuesday. The drop came after the company announced its fourth-quarter results following the market close on Monday.
Clover Health reported Q4 revenue of $166.2 million, up 44% year over year but a little below the consensus Wall Street estimate. The company posted a net loss of $81.6 million.
Probably the most concerning thing to investors, though, was Clover Health's guidance for 2021. The company projects revenue between $820 million and $850 million. The midpoint of that range reflects year-over-year growth of around 24%, which is a lot lower than the 46% growth in 2020. The range is also below the 2021 revenue projection of $880 million in the company's investor presentation from October 2020.
Growth stocks like Clover Health can't afford to have a misstep. Any problems cause shares to fall -- and sometimes fall hard.
Clover Health has experienced its fair share of problems in recent weeks. The stock sank after a well-known short-seller made allegations about the company in early February. Now the company's Q4 update has disappointed investors.
The company probably needs to lay to rest the issues raised by the short-seller, Hindenburg Research, before the stock can rebound.
There are a couple of key things to watch with Clover Health in the coming months. The company expects to launch its direct contracting program in April where can benefit from reducing Medicare expenditures. The increased widespread availability of vaccines could also help Clover Health by enabling it to make more direct in-person sales for Medicare Advantage plans.