By Dhirendra Tripathi
Investing.com – Clover Health (NASDAQ:CLOV) topped up previous session’s 32% gains with more than 60% jump during Tuesday's session as the retail trading mania, driven by Reddit chat groups, continues to expand the list of meme stocks.
Wendy’s (NASDAQ:WEN), another addition, was also up 14%.
What apparently started with GameStop (NYSE:GME) in December as seemingly a fun activity for the Reddit gang has now expanded to include AMC Entertainment (NYSE:AMC), Koss (NASDAQ:KOSS), BlackBerry (NYSE:BB) and others with some serious billions at play.
WallStreetBets is the most popular Reddit forum and has more than 10 million members driving each other to take on the Wall Street giants who are short on a stock. Short sellers expect a stock to go down.
It’s the Reddit retail frenzy that has led AMC shares to rise 3,700% in less than a year.
A short squeeze could be behind the surge in Clover Health, which has 32.7% of its float sold short, according to data from S3 Partners. When a heavily shorted stock suddenly jumps higher, it is usually because short sellers are forced to buy back shares to cover their positions to cut losses.
Clover Health is a Medicare insurance start-up that went public via Chamath Palihapitiya’s SPAC.