Reddit darling Clover Health set for record high in latest 'meme stock' rally

FILE PHOTO: The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, U.S., April 16, 2021. REUTERS/Carlo Allegri/File Photo

(Reuters) -Shares of Clover Health Investments Corp jumped 18% and were on course to hit an all-time high on Wednesday, with individual traders on online discussion forums pumping up the stock a day after they sent it soaring about 86%.

Medicare-backed insurance seller Clover Health is a new favorite of small-time traders who had previously sent shares of GameStop Corp and AMC Entertainment Holdings soaring using social media channels such as Reddit’s WallStreetBets.

On trading-focused site Stocktwits, message volume related to Clover Health more than doubled and 95.4% of the messages reflected a positive sentiment toward the heavily shorted stock.

Clover Health was also among the most traded stocks premarket after logging the highest trading volume on U.S. exchanges on Tuesday.

Among other “meme stocks”, shares of video-game retailer GameStop were up 2.7% on Wednesday, while AMC and security solutions provider BlackBerry’s U.S.-listing fell 7.4% and 5.4%, respectively.

Lordstown Motors Corp was down 1.4% after Tuesday’s 16.3% tumble, which was sparked by a “going concern” warning.

The recent surge in some meme stocks has spurred some hedge funds into using options to bet against them while capping risk, seeking to avoid the fate of Melvin Capital, which was hit hard after betting against GameStop earlier this year.

Clover’s stock has climbed about 32% in the year through last close, with a Reddit-fueled jump of 190% this month making up for lackluster returns earlier in the year.

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