As I write this, Clover Health (NASDAQ:CLOV) is trading at $8.78 per share. But by the rumblings on the Reddit message boards, CLOV stock is about to go higher. Clover has been one of the “stonks” that are a part of the investing landscape in 2021. Affectionately called the “apes,” this network of traders is ready to place their diamond hands on the stock.

CLOV stock has a short interest of its float sitting around 37%. That makes it a prime short squeeze candidate. And, based solely on that metric, the apes have a case. They have sent shares of the health insurance provider spiking on two other occasions since it went public. They’re hoping that the third time will be the charm. 

It seems to me that investors are faced with a choice. On the one hand, you can take a trip to the Planet of the Apes and you could do very well for yourself. Or you can keep your feet firmly planted on planet Earth.  

Both paths entail some risk and potentially a significant reward. Clover bulls say that the company represents the future of health insurance. They predict that in future years, medical schools and teaching colleges will be using the Clover Assistant as part of their curriculum. There’s scant evidence to support that, and even if it does happen it’s a future that’s years away.  

However, there’s one thing that the apes have made very clear in their comments to me. They. Don’t. Care. Fair enough and I’ve already said that CLOV stock is likely to go higher. And nothing I write about here is going to change that.

The Other Side of the Clover Story 

Back here on planet Earth, Clover Health has some things to like. But it also has significant areas of concern. For starters, the company provides insurance in the low-margin Medicare market. Like all Medicare insurance providers, the company is paid a fixed amount by the federal government. This amount is based on a statutory formula.

As I wrote back in May, “That amount is based on the rating the company receives. That means that the value of each patient in the network is dependent on the quality of service that Clover provides.”   

Clover bulls might argue that the company can up charge through additional services and/or supplemental insurance premiums. However, approximately 66% of all Medicare Advantage enrollees pay no premium.  

InvestorPlace contributor Alex Sirois made this astute observation. Clover’s losses keep rising even as they add new patients. I liken this to the food truck that keeps losing money even as they outsell the competition. Pricing power matters and Clover does not have any.  

Furthermore, insurers have to operate within the regulatory framework of Medicare Advantage plans which place a limit on out-of-pocket costs and place a cap on service fees. 

Another bullish argument for Clover Health is its use of artificial intelligence (AI). The Clover Assistant tool performs predictive analysis to help determine the best course of treatment. However, it’s questionable as to whether Clover is alone in this area. For example, UnitedHealth Group had information it is 10-K filing that leads one to believe that it possesses data analytic and diagnostic technology.

Is CLOV Stock a Buy? 

I feel almost certain that CLOV stock is going to move higher in the short term. How much higher and how long it will last are anybody’s guess.  

However, I don’t like paying tomorrow’s price today. And it seems that the plan of attack is to drive CLOV stock up to where they believe it “should” be in a few years and then wait it out. If they succeed, it will be tough for earthlings to buy into the stock at a suitable price.  

Of course, there’s also a possibility that Clover Health does not deliver on the hype that the company’s management team is offering. That could shake loose some of those diamond hands and could lead to an unfortunate outcome.  

On the date of publication, Chris Markoch 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. 

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.