Palihapitiya-Backed Insurer Clover Falls After Hindenburg Report

Clover Health Investments Corp., the health insurer backed by Chamath Palihapitiya, fell after Hindenburg Research published a report saying the company misled investors.

The stock slid 12% Thursday to close at $12.23. Clover is working on a response to the report that should come out Friday, a spokesman said.

Palihapitiya-Backed Insurer Clover Falls After Hindenburg Report

Clover, a startup backed by Alphabet Inc. and Sequoia, agreed to go public in October through a merger with Social Capital Hedosophia Holdings Corp. III, part of a wave of deals with blank-check companies to list shares on exchanges. Venture capitalist Palihapitiya backed Social Capital III, a special purpose acquisition company that raised $720 million in an initial public offering in April.

While Hindenburg said it’s not betting against Clover shares, it has made a name for itself among short sellers. Last year, shares of electric-vehicle maker Nikola Corp. cratered after a critical report from Hindenburg. The research firm had a short position in Nikola and stood to benefit from a plunge in its stock price.

Hindenburg defended the role of short sellers in the Clover report, saying it hoped its research would show how they “play an important role in a healthy, functioning market.”

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