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Here's Why Clover Health Is Soaring Today

By Matthew Frankel, CFP® – Sep 7, 2021 at 2:25PM

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The volatile Medicare stock is rising sharply.

What happened

Clover Health (CLOV 4.88%), the Medicare insurance technology company, has had a volatile history since going public through a Chamath Palihapitiya-backed SPAC, and it is on the move on Tuesday. As of 2 p.m. EDT, the stock was higher by more than 25%.

So what

Surprisingly enough, the move is coming without any company-specific news. But recall that this isn't the first time we've seen Clover skyrocket without a good business-related reason. In June, the stock jumped from about $9 to more than $28 over the course of three trading sessions as part of a "meme stock" craze that also saw fellow meme stocks AMC Entertainment (AMC -1.70%) and GameStop (GME -1.98%) move sharply higher.

Nurse helping older man take medication.

Image source: Getty Images.

Well, there's a good reason to believe that today's move is similar in nature. On the Wallstreetbets Reddit group, Clover was the most frequently mentioned stock on Tuesday. Several other meme stocks, including AMC, were higher as well.

Now what

As mentioned, last time Clover started to rise without any news, the move lasted for about three days and resulted in the stock price more than tripling. So it's entirely possible that this move could be sustained for some time.

However, it's also worth mentioning that once the steam ran out of the last rally, the stock fell back to Earth rather quickly. So this is definitely a situation in which investors should tread carefully. The best course of action for long-term investors who own shares and believe in Clover Health's long-term potential is likely to do nothing at all.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Clover Health Investments Stock Quote
Clover Health Investments
$1.29 (4.88%) $0.06
GameStop Stock Quote
$26.17 (-1.98%) $0.53
AMC Entertainment Holdings Stock Quote
AMC Entertainment Holdings
$7.51 (-1.70%) $0.13

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