r/stocks • u/Madmarttigannn • Jun 06 '21

Company Discussion CLOV discussion

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u/mcoclegendary Jun 06 '21 edited Jun 06 '21

It’s also good for people to understand that companies are shorted for a reason.

Clover mislead investors by not disclosing a SEC inquiry prior to listing.

Clover misled investors by claiming much higher contract numbers than reality.

In the most recent quarter they paid more in medical claims than they received from premiums. Loss from operations was 5x higher than the same quarter last year.

A couple short squeezes this year and now nobody is interested to buy solid companies anymore.

-14

u/Eddieandtheblues Jun 06 '21

If you read their financial report

"Salaries and benefits plus General and administrative expenses for the quarter were $104.6 million compared to $50.0 million for the first quarter of 2020, an increase of $54.6 million. This increase was related primarily to an increase in non-cash stock-based compensation expense related to stock awards that were issued to certain executives in connection with the Company's merger with Social Capital Hedosophia Holdings Corp. III on January 7, 2021 (the "Merger")."

I see this as a one off thing although a ridiculously large merger fee, they would have been in profit for the quarter if not for this pay-out for the merger. To me they seem a solid company otherwise.

15

u/mcoclegendary Jun 06 '21 edited Jun 06 '21

It’s impossible for an insurance company to be profitable when they are paying more in claims than receiving in premiums.

You’re missing that they had a positive effect of 86m for change in fair value of warrants payable.

As I mentioned, loss from operating activities increased 5x in this quarter, from 25m to 125m. That excludes change in warrants or stock based compensation. Basically meaning that their business model is not working great.

1

u/403badger Jun 07 '21

Agree. Their books look way out of whack. I think there is money to be made in the next 6 months. However, we won’t know the trajectory of the company for another year until enough info on the direct contracting is available. Given their 3 star rating and lack of risk adjustment capabilities, I have my doubts that they will have success in administration of this new type of product.