Clover Health stock (NASDAQ: CLOV) surged 10% after the healthcare insurer’s second-quarter trading update impressed the market. After losing 72% in the last two months, CLOV was in desperate need of resuscitation, and that came in the form of its Q2 results, which revealed a 140% jump in revenue to $412.5 million.
Equally impressive was that both Medicare Advantage memberships and direct contracting also grew in the three month period. However, the company is still a loss-making endeavour, although given the increasing revenue, at some stage, that may change. Furthermore, CEO Vivek Garipalli predicts the growth trend will continue, telling analysts on the earnings call: ” We have ambitious goals to maintain an aggressive growth trajectory” Adding, the company expects full-year revenue of around $1.5 billion.
Considering the short interest decreased by 12%, the news was certainly not welcomed by those betting against the price. Despite obvious short-covering yesterday, CLOV is still ripe for a squeeze. More than 28.6 million of the available 133.7m float (18.88%) sits in the hands of shorts. This is considerable, and should the Clover Health stock price continue to forge higher, it may lead to another spike.
CLOVE Technical Analysis
The daily chart shows that for the last month, CLOV has been trading in a narrow channel between $7.67 and $9.45. Notably, the 100-day moving average at $9.36 has proven the top end of the band. In yesterday’s session, Clover briefly pierced the average, trading to a high of $9.65. However, it was unable to finish the day above the resistance. This is, therefore, the first level to watch in today’s trading session.
A convincing clearance of $9.36 brings the 100-day average at $10.44 and the 50 at $10.64 into focus. A decisive clearance of those opens the door to the 24th of June high at $15.20, around 60% higher than last night’s close.
However, early indications suggest the stock will open lower today, and this is concerning. However, the high level of short interest and the positive data should see a bid below the market. Therefore, the bullish outlook should play out as expected. Although, this is dependent on CLOV remaining above $7.67. Should the price lose this support, the bullish view becomes invalid and suggests the shorts are back in control.