The CLOV short interest is an illusion. Of the 40 million short shares being pointed to, the first 20 million were very probably associated with warrants back when the stock was trading at $13.00 and above. There will be no short squeeze of this short interest, since the short sellers can simply buy the stock at $11.50 a share and cover the short sale with the newly created stock.($1.50 difference was some of the warrant holders cost for the warrant.)
There is another 20 million of warrants outstanding that are also at $11.50 that may be involved in some way that I do not understand at the moment. But the key point is that the holders of these warrants can also buy new shares at $11.50, so if they are part of the short interest, they cannot be squeezed. So there is a possibility that there is no real net short interest at all.
Not going to investigate further, however, because I have no interest in this company. Huge stock volume transactions and gigantic options volumes today. Sheep getting fleeced. A lot of foolishness once again.
Please remember that you have to subtract convertible debt, convertible preferred, and warrants from short interest, because most of these holders have already sold short the shares they are entitled to convert into -- they did it at the time they bought the convertible debt or preferred, for example, if it made sense at the time (it almost always does). Warrant holders do it all the time if the stock goes over their conversion price, which happened here. They don't have to convert the warrant by the way, if the stock again goes lower -- they can just buy lower and cover (as may be going on here) and hold on to the warrant in case it becomes more valuable in the future. They can keep doing this over and over, using the warrant as a baseline to work against. Short when its high, then cover when the stock is low, or cover with warrant if the stock never goes lower again.
