Medicare Advantage insurer Clover Health’s (CLOV) shares have declined in price substantially over the past few months after hitting their record high in June, driven by the meme-stock craze. The stock is currently trading near its 52-week low. So, given the company’s low-profit margins, is the stock a buy on its dip? Let’s discuss.Clover Health Investments, Corp. (CLOV), in Franklin, Tenn., is a U.S.-based Medicare Advantage insurer that provides preferred provider organizations and health maintenance organizations with health plans for Medicare-eligible consumers. The company was listed on the New York Stock Exchange on January 8 through a merger with venture investor Chamath Palihapitiya’s Social Capital SPAC.
CLOV caught Redditors’ attention in early June, fostering a short squeeze to reach its record high within a week.. However, the Reddit-fueled run-up for this meme stock did not last long due to its weak fundamentals. CLOV shares are down substantially from their June high. The stock is currently trading below its 50-day and 200-day moving averages and near its 52-week low.
The stock’s price slumped after the company announced its issuance of an additional $300 million of common stock, diluting the holdings of existing shareholders. On November 23, CLOV closed a public offering of shares of its Class A Common Stock. The company expects to use the offering’s net proceeds for working capital and general corporate purposes.