Clover Health Shares Pop For Second Day On Now-Debunked “Short Squeeze” Narrative

Clover Health Shares Pop For Second Day On Now-Debunked “Short Squeeze” Narrative

It appears the crowd over at WallStreetBets may be as relentless as they are oblivious. 

Shares of Clover Health – most recently known for plunging after noted short seller Hindenburg Research accused the company, and its resident advocate Chamath Palihapitiya, of failing to disclose a DOJ inquiry before going public – were up as much as 10% Monday morning on what appears to be a now-debunked notion that the company was sporting short interest that rivaled GameStop.

The company became a hot topic on Friday of last week, spiking 20% on the day to close the week, after S3 Partners – a company that is supposed to specialize in data analytics – apparently incorrectly reported during the week that Clover’s short interest as % of its float was more than 140%.

That led to reports like this one, from Benzinga, stoking the fires on Reddit’s WallStreetBets board with talks of yet another potential epic squeeze. The pump was also helped along by Twitter users and traders looking to bottle up some of the GameStop magic again:

Which is all good and well – except the denominator that S3 used to calculate its “short interest as a % of float” number – reportedly an incorrect float number used produced by FactSet – appeared to have been acknowledged as incorrect before the end of the day Friday.

The data was quickly challenged by others on FinTwit:

S3 issued a correction on Monday morning at about 0755EST, tacitly blaming FactSet for the data discrepancy and claiming their number of shares sold short “remained accurate”, despite the massive delta between the two “short interest as % of float” data points:

Prior to that, S3 partners had remained quiet on the situation, despite more than $2 billion in Clover shares changing hands on the surge Friday. When S3’s data was publicly called into question by the end of the day Friday, the company stood by its numbers and pointed the finger at FactSet.

The company’s resident “expert”, Ihor Dusaniwsky, also doubled down on what was, at that point, known to be a potentially incorrect calculation. 

The incorrect information caused Clover to record the “2nd highest increase in call option volume for any U.S.-listed company,” FinTwit personality @Keubiko noted. 

The company’s trading volume on Friday dwarfed any of its previous trading days. And, if Monday is any indication, Clover could be heading for another heavy-volume day.

But hey, who are we to spoil the SPAC party? Retail’s gonna retail…

Tyler Durden
Mon, 04/19/2021 – 08:10

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