In a world where toxic positivity appears to be the norm, having a negative opinion on Clover Health (NASDAQ:CLOV) could be risky. Still, it’s difficult not to be pessimistic about CLOV stock. Though a favorite among the meme-trading crowd, it just hasn’t lived up to its potential.
I don’t want to bore you with the statistics but to be quick, here they are. On a year-to-date basis, CLOV stock is down nearly 38%. Since the close of its debut public trading session in January 2021, shares have plummeted around 75%. Usually, you don’t lose three-quarters of your market value unless there’s something horribly wrong about the business.
On paper, the idea behind Clover Health is an intriguing one. As our own Chris Tyler stated in his inimitable way, “Making the poorly managed, costly and inequitable Medicare Advantage system a more productive and fair market for providers and its recipients vis-à-vis the Clover Assistant platform is a productive mission to say the least. I’m on board for that.”
Indeed. If the underlying business of CLOV stock could impart some efficiency in a grossly inefficient system, who wouldn’t want to support Clover?
“But the business’ advancement hasn’t been without its share of mounting costs for CLOV,” Tyler reminded us in early December. “And [the third quarter of 2021’s] ballooning red ink as the outfit looks to grow its business confirms as much.”
“Sales of more than $427 million grew by more than 150% compared to the prior year’s third quarter. But the growth is on the back of sales tactics like higher reimbursements and generous payouts. It’s unsustainable.”
Precisely. It’s hard to imagine at a time of soaring consumer inflation and now warfare that investors would rotate into risk-on assets like CLOV stock. But there might be a miracle around the corner.
Geopolitics Could Bail Out CLOV Stock
Typically, though not always, mass human emotions wins the day in the market. No matter how much analysis and research you put in, the market will do what it will do. It’s the fascinating and frustrating component of Wall Street capitalism — and it rings especially true for meme stocks.
Well, under that thesis, we might have gotten a shot in the arm from Ukrainian President Volodymyr Zelensky. In a stunning report by CNN, Zelensky turned down an offer from the U.S. government to evacuate Kyiv. Instead, he simply stated, “The fight is here; I need ammunition, not a ride.”
In this western ecosystem that has arguably gone overboard with sensitivity training and politics, Zelensky taught the world what true masculinity looks like, not the buffoonery of “alpha male” antics that dominate social media streams.
And you know what? With his steadfast commitment to directly fight the invading Russian forces, Zelensky may have saved us all.
Fox News, which curiously appeared to side with Russian President Vladimir Putin, now is warming to Ukraine. The country of Germany, which has been a sorry sight of pensiveness, reversed course and committed to send weapons to the embattled nation.
Zelensky’s determination to go down with the ship if necessary inspired not only his countrymen but the world. So, I don’t doubt that his unprecedented bravery could turn the tide for CLOV stock — not directly, of course, but as a source of stability against a reckless decision for war.
You see, I’m in the camp that the battle for Ukraine is the battle for the soul of democracy. If Ukraine falls, Taiwan is next. That’s why I was personally nervous about the investment market — too few seemed to have the will to do what was necessary.
Zelensky may have changed all that.
Keep Your Optimism in Check
You may have noticed that throughout the world, people from all walks of life have stood up to Putin’s Russia. Even Russians themselves are risking their freedom and safety to protest this outrageous breach of international law.
And yes, I too am standing up for Ukraine, through civil demonstrations and donations to multiple charities that serve the Ukrainian people. I genuinely believe that their fight is our fight — and I’m absolutely putting my money where my mouth is.
But this wouldn’t have happened without Zelensky. His decision to stay when he could have fled would have collapsed Ukraine. In turn, it would have set a ticking time bomb for China and certain belligerent nations to have funny ideas about international sovereignty.
Because of the sharp Ukrainian resistance, I see an eventual path of recovery — and because China will certainly be thinking twice about making unilateral decisions. Thus, I’m much more malleable to the possibility that something like CLOV stock could jump higher again.
Now, it’s important to keep your optimism in check. But maybe, just maybe, the case isn’t completely hopeless.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
