(Bloomberg) — Clover Health Inc., the chamath Palihapitiya-backed health insurer, posted a second day of profits that appear to be driven by retail investors aiming to Penalize short traders who bet on it.
Clover was up 72% by 1:25 p.m. in New York trading after briefly doubling. The gains have wiped out five months of stock losses. as part of a broader sale in a Palihapitiya-backed company. in just two days Volume traded on Clover more than 22 times its three-month daily average on Tuesday, with a record 559 million shares changing hands.
The sudden surge in demand came after retailers realized short sellers had increased their bets on Clover, a move that left them vulnerable if the stock began to recover.
In the Reddit forum WallStreetBet Talks have built this week on the potential to squeeze short-term stocks. Following similar successes in meme stocks, including Workhorse Group Inc. and Richard Branson̵7;s space exploration company Virgin Galactic, were up 19% and 5.6% respectively.
Bearish bets on Clover have been rising steadily since March and are now at $570 million, or 42% of the public float, according to data from S3 Partners. Day traders also touted the potential inclusion of stocks in the Russell index. – Expected rebalancing of those benchmarks in late June.
Read more: AMC, Wendy’s Lead Rally as Meme Stocks Rise for Second Day
Ihor Dusaniwsky, managing director of predictive analytics at S3, said: “Short sellers appear to be shorting into rising markets and overheating stocks. They are looking to pull back from these higher levels,” said Ihor Dusaniwsky, managing director of predictive analytics at S3.
Short sellers are down about $465 million today in losses of $517 million a year.
Clover declined to comment on the move.
Other retailer favorites such as AMC Entertainment Holdings Inc. and GameStop Corp. were seen Tuesday amid huge volumes, Wendy’s Co., the newest member of the frantic retailer, climbed to record amid Reddit.
Michael O’Rourke, Chief Marketing Strategist at the company’s Chief Marketing Strategist, Michael O’Rourke, said: “The power of social media network effects attracts more people to engage. So they began to broaden their horizons. look for other names with high short-term interest or something like that.” Jones Trading
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