The Clover Health share price has not been left behind in the ongoing recovery of American stocks. The CLOV stock is trading at $3.37, which is the highest it has been since January 2022. It has jumped by more than 72% from the year-to-date low. As such, it has outperformed the S&P 500 and Nasdaq 100 indices that have also risen.
Why CLOV has rebounded
The strong comeback of the Clover share price can be traced to when it published its most recent quarterly results. Its stock jumped by 36% even after it announced a wider loss. Investors cheered the company’s guidance, which called for revenue of between $3-$3.4 billion. This guidance was better than the median estimate of about $2.3 billion.
As a result, Wall Street analysts upgraded their Clover Health stock price outlook. For example, those at Cannacord Genuity boosted their outlook for the stock from $6 to $7. Cowen analysts also upgraded from underperform to market outperform. Other analysts from SVB Leerink and Credit Suisse decided to downgrade the firm.
Another possible catalyst for the CLOV share price is that insiders have been buying the stock. In the past few months, directors Lee Shapiro and Chelsea Clinton bought shares worth over $500,000. In November last year, Chamath Palihapitiya bought shares worth almost $10 million. Most importantly, the overall short interest has declined sharply in the past few months.
Still, a key challenge for Clover is that dilution could be in play. The firm has already diluted shareholders in its short stint as a publicly-traded company. In 2021, it sold 52.2 million shares, with the total amount of dilution estimated to be worth over $52.2 million. This capital raise was notable since it was priced in at $5.75. A future dilution in the past cannot be ruled out.
Clover Health share price forecast
The CLOV stock price seems to be forming a rounding bottom on the daily chart. In price action, a rounding bottom is usually a bullish signal for investors. Another notable thing is that the stock is approaching the 23.6% Fibonacci Retracement level. It has also climbed above the 25-day moving average.
Therefore, my medium-term target for the Clover Health share price is at $6.50, which is along the 50% retracement level. A drop below $3 will invalidate this view.