If new Securities and Exchange Commissioner Gary Gensler wants to get a feel for meme stocks, he might want to pay attention to one in particular at Tuesday’s opening bell on Wall Street.
Clover Health CLOV,
While Clover wasn’t the only meme stock to take off on Monday –the so-called BANG stocks: BlackBerry BB,
According to data from HypeEquity, which tracks social media sentiment on individual equities, the volume of social media users commenting on Clover was up by more 2,000% at one point on Monday, showing what amounts to a very strong flame for any meme stock.
On the other side of the equation was the oxygen that retail investors often need to pump what they see as an undervalued stock — short interest. Premarket data from Fintel early Tuesday showed that the health care startup is under serious pressure from short sellers, with a short volume ratio of almost 32%, making it the 36th most shorted stock of the 7,300 companies covered by Fintel.
As GameStop proved in January and AMC proved again just last week, the confluence of social media mania and short seller thirst are the prime drivers of memes, even if many of the retail investors plowing into what were essentially penny stocks are doing so in some cases on what they see as a long-term value investment thesis.
But the technical aspect of targeting cheap stocks with high short interest for a broad and coordinated attack on social media remains a very popular strategy for those inside the trade.
“If AMC can go from 9 to 70 with 20 percent [short interest] , we can go to $100 and beyond EASILY,” posted user BoredBillionaire.
On other corners of social media, Clover was already being anointed with a very telling nickname: GME2.0.
