Clover Health (NASDAQ:CLOV) is down more than 10% in trading today after it reported underwhelming earnings on Monday. CLOV stock is also under pressure more broadly from both the Department of Justice and Securities and Exchange Commission as well as a number of class-action lawsuits.
Clover Health ended its 2020 Q4 with a net loss of $81.6 million, and a slight revenue miss of $166.2 million, compared to consensus estimates of ~$167 million. That slight revenue miss might not have been so bad for the stock, which dropped a little in aftermarket trading yesterday, but CLOV stock is under serious pressure following a February report by Hindenburg Research alleging the company failed to disclose a DOJ investigation.
The DOJ has issued a request for information to the company, but has yet to comment on the scope of that inquiry or the possibility of an investigation. Clover Health has said those inquiries were standard practice, given it works in the healthcare sector, and that the nondisclosure to investors came after consultation with their lawyers.
That response has allayed the fears of some, while others remain understandably skeptical. Following the Hindenburg report, the SEC informed Clover Health it would be conducting its own investigation. A number of class-action lawsuits have since been filed in various jurisdictions.
Venture capitalist Chamath Palihapitiya, who helped bring CLOV public via SPAC merger, was mentioned as a point of concern in the Hindenburg report; however it appears Palihapitiya has his focus elsewhere, as he recently filed to bring several more SPACs public.
On the date of publication, Vivian Medithi did not have (either directly or indirectly) any positions in the securities mentioned in this article.