Here is my best stock of memes right now
Ia recent episode of The grade at fool live, Fool.com contributor Matt Frankel, CFP, and chief growth officer Anand Chokkavelu ranked 10 of the most popular even stocks in the market. Although many did not impress any of the experts, Clover Health Investments (NASDAQ: CLOV) was Frankel’s clear No. 1. In this clip, recorded on June 25, he explains why.
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Matt Frankel: Well, this is a business that I’m interested in, but I’m not interested in owning a store of memes, I just am not. Especially that one, I think the day I sold it it went, I think, from $ 14 to $ 28 in one day. When it happened, I go out, I’m fine. Not one of my most convinced holdings as you said. I decided to sell when it was around $ 20, I paid $ 6 per share.
Anand Chokkavelu: Pleasant.
Frankel: More than a triple in, I think, three months. I was totally happy to take the money and run away, and if it comes back down for a reasonable price, I could buy it again. But this is a very real deal, the lowest on my list anyway, which is why I think you’ve seen such violent price action in these; 37% short-term interest, which is very, very high. It’s as if no GameStop at its peak, but it is quite high. Clover, he crashed to earth.
Chokkavelu: It was over 100%, right?
Frankel: Right. Clover peaked at around $ 29 per share, wish I had timed it a bit better when I sold it. But since then it has fallen over 50% to less than $ 14 a share as I researched for it. Trading for a market cap of approximately $ 5.6 billion. It’s actually the only one on my list that’s been down since the start of the year. It started the year much higher than it was because if you remember what was going on at the start of the year, it wasn’t stock trading meme, it was the bubble. SPAC who brought it up. Clover Health, call it a double meme stock because it was one of the stocks in the SPAC boom, then it collapsed when the SPAC boom faded, then the meme stock rally fueled it. on the rise. Clover is a Medicare Advantage provider, they are diversifying through original Medicare plans. All they do is use technology to cut costs, they claim to be 17% cheaper than the average competitor, when it comes to administering Medicare Advantage plans. It’s something older people need, and if you could do it for less, it’s a great business model. They are growing fairly quickly, their membership has grown 18% in the past year, revenues have jumped 21% in the past year. They’re actually pretty cheap for a stock of high-growing memes at this point. They are trading at less than seven times sales, which is pretty cheap for a high growth tech title these days, especially one of Chamath’s SPACs. Galactic Virgo is trading at an infinite multiple of sales because it does not have any. I know Open door trades at a fairly high turnover multiple, SoFi is too. This is a fairly reasonable value for technological action. They fell a few months ago because of some short seller attacks. Hindenburg Research released a report on the short seller which revealed that there had been, as we see an investigation, I believe it was that they were not disclosing to shareholders. It might turn out to be unimportant, which is what it really sounds like, but it was enough to scare investors off. This is what made the stocks drop into the $ 6 to $ 7 range when I finally bought. They handled the rally in stocks well. They recently announced that they were planning to raise capital. They announced they were going to sell around $ 500 million in stock at these high levels provided the higher stock price holds, I’m all in favor of this move, it’s still a company that loses money. They lost just over $ 48 million last quarter. They have $ 720 million in cash that they got from the merger of PSPC and the PIPE that went with it. But that’s still a pretty high rate of money consumption. They’re going to have to raise capital to keep growing unless they can find a path to profitability, which I think is my biggest reservation about this stock. But the size of the Medicare addressable market is absolutely huge, which I think is why it’s my number 1. It’s a high risk game. There is a lot of execution risk here, but there is a lot of reward if they are successful. That’s why I ranked it # 1.
Anand Chokkavelu, CFA owns shares of Clover Health Investments, Opendoor Technologies Inc., SoFi Technologies, Inc. and Virgin Galactic Holdings Inc. Matthew Frankel, CFP owns shares of SoFi Technologies, Inc. Motley Fool owns and recommends shares of Opendoor Technologies Inc., SoFi Technologies, Inc. and Virgin Galactic Holdings Inc. Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.