Clover Health shares tumble in another wild day for meme stocks

Shares of Clover Health Investments Corp slid on Wednesday, a day after the new retail trader favorite soared about 86%, the latest meme stock to join the frenzy this year.

The Medicare-backed insurance seller’s shares were recently down around 13% at $19.20 after climbing to nearly $29.

Clover Health has been among the most visible of the new meme stocks to enthrall investors following forums such as Reddit’s WallStreetBets. The fresh crop shot higher in recent days following a resurgence in shares of video game retailer GameStop Corp and movie theater company AMC Entertainment Holdings.

Many of the shares have taken a wild ride, with daily gains or losses in double-digit percentages.

“There are plenty of people making money, but there are plenty of people getting their heads handed to them,” said Ken Polcari, founder and managing partner at Kace Capital Advisors. “These names are risky because they’re ripping all over the place.”

One fresh name joining the rally was prison operator Geo Group, whose shares jumped as much as 70% and were recently up 56% on the day.

AMC shares were down about 11% while security solutions provider BlackBerry’s U.S.-listing edged 1% higher.

As stocks like AMC, GameStop and Clover Health hog the headlines, Gerber Kawasaki CEO Ross Gerber tells Reuters’ Fred Katayama that the outsized valuations of so-called “meme stock” companies are reminiscent of those seen in the dot-com mania of the late1990s.

In the past two weeks, meme stocks have received $1.27 billion of retail inflows, according to Vanda Research. That matched their peak in January, when a surge in shares of video game retailer GameStop pushed bearish investors to unwind short positions, further boosting the stock price.

The group has seen larger inflows than any other sector, including the S&P tech sector, Vanda’s data showed.

Shares of GameStop were up 4% ahead of quarterly results due after the bell, with a cult following of investors looking for progress in a turnaround at the retailer.

At a brief annual shareholders meeting ahead of the report, GameStop top shareholder Ryan Cohen, the billionaire co-founder of online pet supplies retailer Chewy, was elected chairman. GameStop announced his nomination in April.

Lordstown Motors Corp’s shares reversed losses and were recently up nearly 4%. A day earlier they tumbled 16.3% after a “going concern” warning.

Surging meme stock prices have spurred some hedge funds into using options to bet against them while capping risk, seeking to avoid the fate of Melvin Capital, which was hit with a short squeeze after betting against GameStop.

Clover’s stock has climbed about 14% year-to-date. By contrast, AMC shares are up around 2,235% while GameStop’s have gained some 1,560%.

(Reporting by Sagarika Jaisinghani and Aaron Saldanha in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili in New York; Editing by Sriraj Kalluvila and David Gregorio)