WallStreetBets (WSB), the Reddit forum that of late have gamed the shares of GameStop (GME) and many other fundamentally weak and heavily-shorted companies to squeeze short sellers out of their positions, has a keen interest in Clover Health Investments, Corp. (CLOV) and MicroVision, Inc. (MVIS). This is evidenced by the significant number of posts highlighting these two stocks in the chat room.
With extremely high valuations relative to their underlying business fundamentals, both CLOV and MVIS are WSB targets primarily because of the whopping short interest in them. But, in the absence of fundamental strength, the rally in these stocks is probably over, and we think they could suffer a significant decline in the near term.
So, we think it’s wise to stay away from these stocks now.
Clover Health Investments, Corp. (CLOV)
CLOV operates as a healthcare technology and insurance service company in the United States. Through its software platform Clover Assistant, CLOV provides Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) health plans to Medicare-eligible consumers. Its Medicare plans include hospital coverage, doctor visits, and drug coverage.
In February, Hindenburg Research published a report that revealed that Clover Assistant is under investigation for alleged illegal kickbacks and marketing practices and undisclosed related-party transactions. And on April 6, 2021, Kaskela Law LLC filed a lawsuit against CLOV on behalf of CLOV’s shareholders.
In March, CLOV partnered with Headline Studio, a content marketing division of Advance, to launch Clover Living, a health and wellbeing magazine designed specifically for senior citizens. Set to be published every quarter, the magazine will include health advice and lifestyle choices. The company hopes to expand its market reach with its quality content.
CLOV’s loss from operations was $68.63 million for the fourth quarter, ended December 31, 2020, which represents an increase of 13.1% from the fourth quarter of 2019. The company’s net loss increased 3.7% year-over-year to $81.58 million. CLOV’s total assets decreased 20.7% year-over-year to $267.25 million as of December 31, 2020. Also, its total liabilities increased 2.7% year-over-year.
Analysts expect the company’s EPS to be negative for its fiscal year 2021. CLOV has lost 35.3% over the past three months. It ended Friday’s trading session at $8.77, which is 99% below its 52-week high.
CLOV’s poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an F grade for Sentiment, and a D grade for Growth and Stability. We have also graded CLOV for Value, Momentum, and Quality. Click here to access all CLOV’s ratings.
CLOV is ranked #11 of 11 stocks in the B-rated Medical - Health Insurance industry.
Click here to checkout our Healthcare Sector Report for 2021
MicroVision, Inc. (MVIS)
MVIS develops PicoP laser beam scanning (LBS) technology, used to create high-resolution miniature projection, and 3D sensing and image capture solutions. The company also develops products for interactive projection, consumer light detection and ranging (LiDAR), automotive LiDAR, and augmented and mixed reality. It sells its products primarily to original equipment manufacturers and original design manufacturers.
On February 22, MVIS completed a $50 million At-the-Market (ATM) equity offering agreement with Craig-Hallum Capital Group LLC. The company issued 2.5 million shares of its common stock, raising $48.7 million in net proceeds. It hopes to solidify its balance sheet with this funding and achieve its previously announced goal of producing a best-in-class lidar sensor with velocity field output by April 2021.
MVIS is scheduled to announce its fiscal 2021 first quarter financial results on April 29, 2021 after the market closes. For the fourth quarter, ended December 31, 2020, MVIS’ total revenue was $395,000, which represents a decline by 1065.8% from the prior-year period. The company’s loss from operations has increased 8.7% year-over-year to $3.56 million. Its net loss was $3.57 million for the quarter, up 8.7% from the year-ago period. Its loss per share was $0.02. Its total liabilities and shareholders’ equity has increased 77.5% year-over-year to $21.01 million as of December 31, 2020.
Analysts expect the stock’s EPS to be negative for its fiscal year 2021. MVIS has gained 7146% over the past year and 234% year-to-date. It ended Friday’s trading session at $17.97, which is 25.7% below its $24.18 52-week high.
MVIS’ POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to Strong Sell.
The stock also has an F grade for Value, Stability, and Sentiment. In addition to the POWR Ratings grades we’ve just highlighted, one can see MVIS' ratings for Growth, Momentum, and Quality here.
MVIS is ranked #44 of 44 stocks in the B-rated Technology – Electronics industry.
CLOV shares were trading at $9.12 per share on Monday afternoon, up $0.35 (+3.99%). Year-to-date, CLOV has declined -45.62%, versus a 12.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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