IPOC now known as Clover Health closed 60% above starting price on Thursday

Summary

  • Social Capital Hedosophia III (NYSE: IPOC) was acquired by Clover Health Investments, Corp., (CLOV) in a reverse merger transaction.
  • Clover’s opening price on Friday was $15.30 and closed on $15.90 after rallying up to $16.68
  • Clover Health is preparing a competitive advantage with its machine learning Assistant that is planned to change the quality of care.
  • The company is also falling under the Healthcare sector that is looking to benefit from Biden’s win and Democrats aim to focus on Medicare and Medicaid.

 

Clamath Palihapitiyia

Chamath Palihapitiya, a well-known Silicon Valley Venture Capitalist, is a former Facebook executive that has been at the front line of special purpose acquisition companies (SPAC) since 2017. In 2019, he took Virgin Galactic space tourism (NYSE: SPCE). Palihapitiyia did five more SPAC IPOs including Social Capital Hedosophia III (IPOC) where he managed to raise several billion in IPOs last year.

Clover Health

Clover Health Investments Corp. is a San-Francisco based provider of Medicare Advantage health plans. Clover Health’s (NASDAQ: CLOV) merger with Social Capital Hedosophia III (NYSE: IPOC) will give Clover Health $1.2 billion in cash. One-third of this cash, $400 million is coming through private investment in the public entity (PIPE) led by Palihapitiya. They ended their first-day trading with a valuation of $7 billion last Friday. Clover Health (CLOV) has replaced Social Capital Hedosophia III (IPOC) in the stock market on Friday.

Clover Heath’s opening price on the Nasdaq was %15.30 which is 5% below Thursday’s closing price of IPOC on NYSE. The stock price went as high as $16.68 but fell before the day closed to $15.90.

The advantage of Clover Health

With President Biden on board, Democrats have made it known that they are looking to expand and bring back Obama’s healthcare style. This means that Medicaid and Medicare across the country such as Clover Health could be potential beneficiaries of this change. Moreover, over the next few months, the company will report complete financial results, where investors would be able to make more informed decisions on the stock.

Clover health plans
Image taken from: http://cloverhealth.com/

More about Clover Health

Clover believes it can overlay data to increase its margins and therefore build a competitive advantage in the sector. I believe that Clover is the right company to do so in a time where data first engineers are difficult to attract. Using machine learning technology, which FDGT is fully focused on, is able to surface various indicators in order to improve care and reduce costs. 

The company says that chronic diseases and proactive care can successfully be achieved with Assistant. This software will make the patient and the physician’s lives easier since is easy to use and can add clinical value to the key areas that the Assistant helps with.

Focusing on the long run, it is very important to notice that the company is doing its best to drive long-term financial success while adapting to technology advancements. Long term, it is really important to watch how the quality of care translates to repeat visits, costs, and scores throughout the plan.

Social Capital Hedosophia III (IPOC)

As of January 7, 2021, Social Capital Hedosophia Holdings Corp. III was acquired by Clover Health Investments, Corp., in a reverse merger transaction. Social Capital Hedosophia Holdings Corp. III focuses on effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. It intends to focus on businesses in the technology industries primarily located in the United States. The company was founded in 2019 and is based in Palo Alto, California.

IPOC has been trading on the New York Stock Exchange for the past 8 months and is now taken over by the Clover Health merger with the ticket mentioned above CLOV. On Thursday, after the merger was announced the stock jumped 10% to $16.02. However, investors that bought Social Capital Hedosophia III at its $10 offering price closed on a 60% above its starting price on its last day of trading. For those of you who bought after the Clover Health deal was announced at $12.68 in October, the return was 26% based on the closing price.

Social Capital Hedosophia II

Social Capital Hedosophia II took Opendoor Technologies (NASDAQ: OPEN) public last month through SPAC. The stock price is, at the moment, trading three times higher than the opening price in April, after the SPAC was announced.

Social Capital Hedosophia V

The news does not end here, since Social Capital Hedosophia V announced on Thursday its plans to take an online lending start-up Social Finance Inc. public through another reverse merger. For those interested, the date remains unknown.

Bottom Line

Special purpose acquisition companies (SPACs) have been trending on the market in recent years. They became attracted to investors for the simple reason that SPACs give them access to new, potentially high-growth companies. It is in every investor’s appetite to invest in a company that is cheap and has the potential to grow very high, as this can maximize the return on the investment.

Disclaimer  I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.

Natalia C. - Junior Analyst at FDGT Academy

Natalia C. - Junior Analyst at FDGT Academy

I am a stock analyst/investor with prior experience and knowledge to BSc Accounting and Finance. After completing my degree and exposure to the accounting firms I decided that the direction I should choose is towards the Investment world. I completed my masters in Investment Management where it gave me solid fundamentals to build my career on. I have examined a lot of different aspects of investment, from REITS, derivatives, currencies, bonds, equity and hedge funds. I never stopped learning about the market which is why I can analyze and write articles for FDGT community always personally opinionated. My passion are green energy and electric vehicles stocks as a whole. I also had my share of analyzing the work form home stocks that are coming to take over in the upcoming years.