Search

Reddit Trading Frenzy Makes 'SPAC King' Chamath Palihapitiya A Billionaire—Again - Forbes

kembaliui.blogspot.com

Topline

A forceful resurgence in shares of Medicare Advantage insurer Clover Health has made "SPAC king" Chamath Palihapitiya a billionaire again over the past week, according to Forbes estimates, as Reddit traders plow into the heavily shorted stock amid a broader movement pinning individual investors against institutional giants.

Key Facts

Shares of Clover Health skyrocketed 32% Monday alongside a slew of other so-called meme stocks as a weeks-long trading frenzy sparked by bullish Reddit traders once again reached a boiling point.

Palahapitiya, 44, ended the day worth $1.3 billion, adding $131 million to his fortune on Monday alone after rejoining the billionaire ranks last week, according to Forbes' estimates using public data.

Ushering in the Reddit-fueled mania, Clover Health's short interest has surged to a record high 40 million shares, according to the latest data, representing nearly 10% of shares outstanding—in line with levels in other meme stocks surging Monday, including BlackBerry, Koss Corp and GameStop.

Analysts pinned Clover Health's Monday volatility to a swath of unusual options activity, as Reddit traders on the r/WallStreetBets discussion board garnered thousands of upvotes in posts touting a potential short squeeze, which typically happens when institutional investors betting on a price decline cut their losses by buying back shares at higher prices.

Clover Health's stock surge also coincided with a Monday spike in trading volume, as shares traded hands a staggering 100 million times Monday—the highest volume since a similar one-day price jump in mid-April.

Meanwhile, experts have been bearish on the stock, with Bank of America analyst Kevin Fischbeck warning in a recent note that the company won't be able to meet its "lofty membership growth targets" and giving the stock a price target of $9—25% below Monday's closing price of $11.92.

With additional reporting by Katie Jennings.

Key Background

Clover Health debuted on the Nasdaq exchange in January after going public in a $3.7 billion deal with Social Capital Hedosophia Holdings Corp. III, one of the six SPACs launched by Palihapitiya's investment firm Social Capital. Clover Health shares soared nearly 60% in the two months after the merger's announcement, followed by a 59% decline through May amid a rush of scrutiny—pulling Palihapitiya out of the billionaire ranks. In a February regulatory filing, Clover Health disclosed that the Securities and Exchange Commission was investigating allegations made by short-seller Hindenburg Research, which published a report days earlier alleging that Clover Health misled investors about its business before going public. The short-seller also revealed the Department of Justice was investigating at least 12 issues concerning kickbacks, marketing practices and undisclosed third-party deals. Clover Health denies any wrongdoing. 

Tangent

Many meme stocks also soared Monday. AMC jumped 15% and at one point skyrocketed more than 20%. Meanwhile, BlackBerry and GameStop jumped 14% and 13%, respectively.

Surprising Fact

Like AMC, which last week announced a rewards program geared toward individual shareholders, Clover Health has embraced its emphatic Reddit investors, even taking questions from them during an earnings call last month. "We are a big believer in the retail investor community," CEO Vivek Garipalli said at the time. "On a personal basis, I started off as a retail investor over 20 years ago, probably trading too frequently. I made money, then lost money..., but [it] really made me want to become a great investor."

Further Reading

Billionaire Clover Health CEO Vivek Garipalli's Expletive-Ridden Tirade (Forbes)

Clover Projects It Will Have Only Half The Medicare Members It Promised Investors Before IPO (Forbes)

Chamath Palihapitiya's Clover Health Discloses New SEC Investigation And Responds To Short-Seller's Scathing Allegations (Forbes)

Adblock test (Why?)



"again" - Google News
June 08, 2021 at 03:57AM
https://ift.tt/3v1GmGg

Reddit Trading Frenzy Makes 'SPAC King' Chamath Palihapitiya A Billionaire—Again - Forbes
"again" - Google News
https://ift.tt/2YsuQr6
https://ift.tt/2KUD1V2

Bagikan Berita Ini

0 Response to "Reddit Trading Frenzy Makes 'SPAC King' Chamath Palihapitiya A Billionaire—Again - Forbes"

Post a Comment

Powered by Blogger.