Is Clover Health a Risky Investment?

: CLOV | Clover Health Investments Corp. Cl A News, Ratings, and Charts

CLOV – Healthcare technology company Clover Health Investments’ (CLOV) stock price hit new highs earlier last month, propelled by the meme-stock frenzy. However, given the stock’s ebbing momentum, is it a safe pick now? Let’s find out.

Data-driven health insurance company Clover Health Investments, Corp. (CLOV), which is based in Franklin, Tenn., offers preferred provider organization (PPO) and health maintenance organization (HMO) health plans for Medicare-eligible consumers. Unfortunately, although the meme-stock fervor set CLOV on fire  in June, the stock has lost its momentum lately. Its shares are down 37.9% over the past month and 43.5% over the past six months.

While an increase in membership and CLOV’s progress in providing high-quality care to its customers helped it generate decent revenue growth in its last reported quarter, its losses have nearly doubled. Management expects the company’s  non-GAAP normalized adjusted EBITDA to be in the range of negative $240 – $190 million for the full year 2021. Furthermore, the company has yet to establish itself as a profitable player in the healthcare industry.

The stock is trading 71.2% below its all-time $28.85 price high, which it hit on June 9, which indicates bearish sentiment. Also, it is trading lower than its $10.41 and $10.57 respective 50-day and 200-day moving averages, which reflects a downtrend.

Click here to checkout our Healthcare Sector Report for 2021

Here is what we think could influence CLOV’s performance in the near term:

Ongoing Investigations

In May, Scott+Scott Attorneys at Law LLP started investigating CLOV’s directors and officers for potential breach of their fiduciary duties to Social Capital Hedosophia Holdings Corp. (SCH III) and its shareholders. Also, Robbins LLP and Lifshitz Law Firm, P.C. announced an investigation into CLOV on behalf of its shareholders for allegedly misleading investors ahead of going public and for potential violation of the Securities Exchange Act of 1934.

Lackluster Financials

For the first quarter, ended March 31, 2021, CLOV’s total revenues increased 21% year-over-year to $200.33 million. However, its loss from operations rose 347.2% year-over-year to $119.09 million, while its net loss grew 71.9% from the prior-year quarter to $48.42 million. CLOV reported a negative adjusted EBITDA of $76.22 million for this quarter, compared to a negative adjusted EBITDA of $21.7 million. The company’s adjusted operating expenses came in at $61.92 million, representing a 29% increase  year-over-year.

Poor Profitability

CLOV’s 8.6% trailing-12-month gross profit margin  is 84.3% lower than the 54.9% industry average. Also,  its trailing-12-month net income margin, ROE, ROA, and EBITDA margin are negative 21.7%, 324.7%, 18.1%, and 25.6%, respectively. CLOV’s trailing-12-month cash from operations is negative $174.19 million.

Unfavorable POWR Ratings

CLOV has an overall F rating, which translates to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. CLOV has a D grade for Growth and Quality. The stock’s inadequate financial strength and low profitability are reflected in these grades.

CLOV  has an F grade for Stability, indicating that it is more susceptible to volatility than its peers.

In addition to the grades we’ve highlighted, one can check out additional CLOV ratings for Sentiment, Value, and Momentum here.

CLOV is ranked #12 of 12 stocks in the B-rated Medical – Health Insurance group.

There are several top-rated stocks in the same industry. Click here to view them.

Bottom Line

While discussion on the r/wallstreetbets forum motivated retail trades and drove CLOV’s shares to unsustainable levels, the healthcare plan provider’s underwhelming financial performance and weak fundamentals have caused its shares to decline significantly over the past month. In addition, ongoing legal investigations of the company could further add to investors’ concerns surrounding the stock’s prospects. So, we believe it’s wise to avoid the stock now.

Click here to checkout our Healthcare Sector Report for 2021

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


CLOV shares rose $0.02 (+0.24%) in premarket trading Thursday. Year-to-date, CLOV has declined -50.39%, versus a 18.14% rise in the benchmark S&P 500 index during the same period.


About the Author: Imon Ghosh


Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CLOVGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


How Low Will Stocks Go?

The S&P 500 (SPY) is testing the 200 day moving average with fears on tariffs and GDP that could push them even lower. Now is a good time to hear what 40 year investment veteran Steve Reitmeister says about the market outlook and odds of bear market.

Why is Stock Market Outlook So Uncertain?

The S&P 500 (SPY) has quickly pushed back from the highs and once again on the verge of a break below the 100 day moving average. Why is this happening? And what comes next? 40 year investment veteran Steve Reitmeister shares his view and top stocks in the commentary that follows...

Trump or the Fed More Important to Stock Investors?

The S&P 500 (SPY) is flirting with new highs once again. But it is not very clear what is driving these stock price gains. That is why Steve Reitmeister shares his latest views including a market outlook, trading plan and top picks to stay on the right side of the action.

Investors in “Wait and See” Mode

Have you noticed that the S&P 500 (SPY) has been trading in a tight trading range of only 6,000 to 6,100 the past few weeks? Steve Reitmeister shares why this is happening along with a game plan for being on the right side of the market action. Read on for the full story...

Stock Market Alert: History Repeating Itself?

The last time we played around with tariffs was back in 2018 when we started a trade war with China. To say the least that was very negative for stocks as the S&P 500 (SPY) tanked the second half of the year. We need to learn from those history lessons to chart our course for investing in 2025. Read on for more...

Read More Stories

More Clover Health Investments Corp. Cl A (CLOV) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CLOV News