- Root is a technology company targeting the $266bn U.S. auto insurance market; shares fell 18% on Friday and have now halved since the IPO.
- Root has a differentiated consumer proposition that seeks to deliver lower premiums and better service using mobile-based telematics.
- Growth has been strong up to Q1 2020 but stalled partly due to COVID; Root guides to a reacceleration to double-digit growth in 2021.
- Loss ratio has continued to improve and was 72% in Root's largest state, matching the low 70s target (though likely helped 6 ppt by COVID).
- At $13.49, Root is worth 5.6x premiums, outside our valuation parameters, but can be of interest to more adventurous investors.
For further details see:
Root: Share Price Halving Since IPO Means Potential Bargain