Today, investors in insurtech company Hippo (NYSE:HIPO) are seeing a lot of green. In earlier trading, HIPO stock surged more than 30%. At the time of writing, this insurance technology company has held gains of approximately 20%.
This move to the upside is a welcome surprise for investors in HIPO stock. Indeed, this de-SPAC (special purpose acquisition company) saw its shares fall off a cliff at the beginning of August. Prior to trading publicly, it was disclosed on Aug. 3 that a massive amount of capital was pulled by PIPE (private investment in public equity) investors in this SPAC. Reportedly, more than 80% of the PIPE financing was pulled, sending shares tumbling from the $10 level to as low as $3.78 a couple weeks ago. Shares traded at more than $15 per share during this year’s SPAC craze and meme-stock mania.
However, since hitting that low, shares of HIPO stock have regained quite a bit of ground. It appears today’s move is a continuation of some strong positive momentum for this stock. Let’s dive into what may be driving HIPO stock higher right now.
HIPO Stock Soars on Increased Investor Interest
As a de-SPAC play, it’s perhaps unsurprising to have seen HIPO stock suffering lately. However, the extent to which Hippo has been beaten down by the market may be viewed as excessive by value investors.
Accordingly, it appears at least part of today’s move, and the price action over the past week, in HIPO stock is a result of investors searching for oversold stocks that can rally. This view is clear on social media forums, with HIPO stock gaining more attention in recent days. Like short-squeeze plays, investors may be buying into the idea that because this stock is so cheap, once momentum materializes, it could really pop.
Accordingly, those bullish on Hippo’s potential rise back to its SPAC initial public offering (IPO) level may note a substantial amount of upside potential with this stock. Indeed, the amount of money that’s been pulled from this SPAC is concerning. However, those bullish on this stock’s investment thesis at $15 must really like Hippo’s risk-reward at the $6.50 level.
On the date of publication, Chris MacDonald 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.