Key Points
- Businesses with multiple stakeholders can be exposed to additional risks.
- Newcomer Clover Health wants to be a market disruptor in the Medicare Advantage space.
Would you want to invest in a relatively new business that's charging forward into a highly contested, highly regulated market -- one that's already dense with entrenched competitors? If you're the sort of investor who immediately answers "Yes!", you're in the right place.
Born from a recent merger with a special purpose acquisition company (SPAC), Clover Health (NASDAQ:CLOV) aims to disrupt the market for Medicare Advantage plans by slashing the costs of healthcare and offering a better value for patients. Even if healthcare insurers aren't common in your portfolio, this stock might be worth a look. But there are quite a few moving parts with Clover, so it's important to understand some things about the company that smart investors know.
1. It's a meme stock
Regardless of its long-term merits, Clover Health is a stock that's popular on retail trader hubs like Reddit. That means the stock can frequently be volatile, seemingly without explanation. It also means that management will have access to an enthusiastic audience of evangelists, which might come in handy.
But don't assume that being a meme stock makes Clover Health a bad stock. If anything, this dedicated community watching from the bleachers might end up holding the stock when other investors would dump it, like after a bad earnings report.
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Read Full Story: https://www.fool.com/investing/2021/08/29/3-things-about-clover-health-that-smart-investors/
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