The Clover Health share price took a dip on Friday after news of a pending lawsuit filed by a shareholder against the company came to light.
The stock is down 2.83% and looks set to end the week lower after a stockholder sued the provider of Medicare Advantage in a Delaware Chancery Court, asking for company documents to investigate officers and directors of the company for possible “materially false and misleading statements”.
Shareholder Richard Armon is suing the company, alleging that board Chairman Chamath Palihapitiya made false statements about the company’s regulatory standing and its business dealings. There is at least one federal class-action lawsuit against the company already.
The situation comes ahead of the company’s first-quarter earnings announcement, scheduled for Monday, 9 May 2022. The company is expected to have the conference call at 5 pm EST, making the earnings announcement an after-hours event.
Technically speaking, the Clover Health share price had experienced a one-month recovery spell in which it climbed from the lows of 1.99 to a high of 3.9 on 30 March. However, this recovery was a rally that attracted short-sellers who pushed prices lower as the wedge pattern resolved.
Clover Health Share Price Prediction
The breakdown move of the rising wedge pattern has extended beyond its completion point and is now challenging the support level at 2.68 (14 March low). If this support breaks down, the next available target comes in at 1.99 (23 February low).
On the other hand, a bounce on the 2.68 support allows for a potential upside move that targets 3.20 (11 March and 12 April highs). Above this level, the 30 December 2021 low/4 April 2021 high at 3.68 forms another northbound target. The bulls must uncap this barrier to take the price activity towards 4.03 (3 January high). The 9 December 2021 high at 4.67 forms a potential pitstop before 5.17 becomes available.