MILE - Root: 85% Down From IPO After Q3 Results But Still Too Speculative
- Root's share price is now down 85% from its IPO. Its market capitalization is just $1bn, compared to net cash of $764m.
- Q3 results and recent news have given little comfort to disillusioned investors. Growth was low and profitability did not improve.
- New distribution with Carvana and independent agents risk taking away Root's telematics focus and increasing operational complexity.
- 2021 operating loss is expected to exceed $500m. Guidance implies the business will shrink in Q4, though a 2022 turning point is hinted.
- Even at $4.10, we find Root shares to be too speculative, as we do not have confidence that performance and growth will improve. Avoid.
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Root: 85% Down From IPO After Q3 Results, But Still Too Speculative