Could Clover Health Be a Millionaire-Maker Stock?

Health insurance company Clover Health (NASDAQ: CLOV) went public via SPAC on Jan. 8, led by charismatic investor Chamath Palihapitiya and it has been a wild ride since. Its shares have soared more than 150% in the past five days as part of a short squeeze driven by the 10 million-strong r/WallStreetBets Reddit community. As of June 8, Clover Health is the fourth most shorted stock on the market -- with 36% of its float sold short.

The high shorting activity derives primarily from entities betting against the stock based on a report published by Hindenburg Research (which didn't establish a short position in the stock at the time) in February. Hindenburg made a series of allegations about Clover Health's business, including that its growth stems mostly from overcharging the federal government for Medicare Advantage reimbursements rather than from the quality patient care. The company allegedly received a civil investigative demand from the Department of Justice (DOJ) per Hindenburg. Will Reddit investors win this bull-bear tug of war and send Clover Health stock into millionaire-maker status (at the expense of hedge funds on the other side of the trade)?

Image source: Getty Images.

Source Fool.com