I have always wondered about why the memesters decided they liked Clover Health (NASDAQ:CLOV) stock.

Maybe it was the short squeeze, which came after Hindenburg Research issued a February report calling the business broken.

Maybe it was Chamath Palihapitiya, whom I have likened to Prof. Harold Hill of The Music Man. (Full disclosure: I memorized the Rock Island song at age 3, then abandoned dreams of a career in rap.)

Maybe they were just sticking it to “the man.” The man, in this case, being one able to read a balance sheet.

Whatever, it’s been harmless fun. If you bought CLOV stock when I dissed it in April and sold when the Reddit crowd sent it to $22 on June 8, you’re in clover. But unless you work at a trading desk, I doubt you did that.

Inside CLOV Stock

Clover Health is an effort to sell seniors Medicare supplement plans using the internet. It competes with companies like Centene (NYSE:CNC), Humana (NYSE:HUM) and United Healthcare (NYSE:UNH), who sell the same policies in more conventional ways.

The key metrics are order flow and premiums earned. Clover earned about $200 million in premiums during the first quarter of 2021. It also paid out $214 million in losses, claims and reserves. (Ooops.) Shares rose briefly after the company reported second-quarter results on Aug. 11. Revenue for the period was $412.5 million, a 140% year-over-year hike. The company also posted a net loss of  $317.6 million.

For this there’s a market cap of $3.45 billion, as of Aug. 18? This when Humana, which is profitable, has a market cap of $52 billion on revenue of $77 billion?

CEO Vivek Garipalli got very loud early this month about adding grocery delivery through Walmart (NYSE:WMT) to his benefits . The problem is that Humana already had such a benefit. Speaking of Walmart, Clover is ending a co-branding arrangement it had with the retailer in Georgia. Instead it’s touting entry into “101 new markets.” By markets, however, read counties. Clover presently sells its plan in just nine states, and the expansion mostly covers just five of them.

Inside Daisy Clover

There are bulls who look at Clover’s weeds and see daisies. Clover gets a three star quality rating from Medicare. But that could rise if changes it supports are made to the ratings system. Clover is using Medicare’s new risk-sharing model, which opens new doctors to customers. The company has also begun offering a home care tool for seniors who can’t get to the doctor.

It’s Clover’s online tools, like Clover Assistant for healthcare providers, that have the bulls excited. But Clover’s rivals also have computers. They also have scale to press clinics and doctors on reimbursement rates. Even if cloud-based tools outperform scaled systems, it’s going to take years to prove the case.

The hype over Clover means a lot of its stock is being held by speculators. That means there’s a lot of movement in the name based on rank speculation. This includes anonymous statements from claimed Medicare brokers, or fan mail from investors who say they put 70% of their savings into it.

The Bottom Line

Since the June pump on Reddit, the shares have been dumped steadily. At its July 30 price of about $8.18/share, it’s back in a trading range it held, for the most part, since March. This followed a steady fall in Clover’s price from January, when it stopped trading as Chamath’s IPOB and began trading on its own, as CLOV.

Clover claims to be a “data-driven” healthcare provider, but every health insurer is data-driven. If there were a “secret sauce” here that can power it past competitors, one of them would buy it. You can wait for that glorious day if you want. I think it’s better to move on.

On the date of publication, Dana Blankenhorn 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.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future, now available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.