Clover Health (CLOV) and MicroVision (MVIS) are two heavily discussed stocks by Reddit's WallStreetBets (WSB) group currently. While these two fundamentally weak stocks have gained significantly solely on the actions of WSB, we think their weak financials and sky-high valuations make them highly risky bets now.WallStreetBets (WSB), the Reddit forum that of late have gamed the shares of GameStop (NYSE:GME) and many other fundamentally weak and heavily-shorted companies to squeeze short sellers out of their positions, has a keen interest in Clover Health Investments, Corp. (CLOV) and MicroVision, Inc. (MVIS). This is evidenced by the significant number of posts highlighting these two stocks in the chat room.
With extremely high valuations relative to their underlying business fundamentals, both CLOV and MVIS are WSB targets primarily because of the whopping short interest in them. But, in the absence of fundamental strength, the rally in these stocks is probably over, and we think they could suffer a significant decline in the near term.
So, we think it’s wise to stay away from these stocks now.