Reasons for this may include wider investor concerns about higher interest rates, the loss in popularity of new IPOs, SPACs and other speculative investments, and Root's lack of any valuation support from fundamentals. We now see no sign that Root's share price decline will stop or reverse.
Full Answer
Should you buy Root Insurance (Root) stock after the lockup period expires?
With Root Insurance stock down 60 percent from the IPO price, IPO investors selling at the current price would be losing money. Therefore, the downside to ROOT stock after the lockup period expires appears limited.
Why is the root share price falling?
First, Root saw an increase in selling as the IPO lockup period approached expiry. When lockups expire, the market can be flooded with new shares. If the demand can’t keep up with the increased supply, the stock price falls. Fearing that the lockup expiry would drag down ROOT stock, some IPO investors have been rushing to sell.
Does Root Inc boast high insider ownership?
In the past three months, Root insiders have not sold or bought any company stock. 54.41% of the stock of Root is held by insiders. A high percentage of insider ownership can be a sign of company health. Only 31.86% of the stock of Root is held by institutions.
What are analysts' target prices for root insurance stock?
Analysts' highest target price for Root Insurance stock is $13, more than double its current price. This target is based on the company's attractive business model of offering differential rates on auto insurance. Tesla has also been experimenting with the concept.
Why does ROOT stock keep dropping?
We believe Root shares have continued to fall from a combination of poor business performance and wider investor disillusionment about SPACs. We see little chance of things changing - Root's Q3 2021 results on November 10 had few positive news, as we explain below, and its shares remain speculative.
Will Root Insurance survive?
ROOT – Root (ROOT) is a popular auto-insurance company that made its stock market debut in October 2020. Though the company is continuously improving its underwriting capabilities and fine-tuning its operating efficiency, the stock has plummeted more than 80% in price over the past year.
What is going on with Root Insurance?
Root Insurance lays off 330 employees, citing pandemic challenges. Columbus-based auto insurer Root is laying off about 20% of its workforce, blaming the pandemic for spiraling costs. In a letter posted on the company's website Thursday, CEO and co-founder Alex Timm announced that 330 employees will be terminated.
Will ROOT stock go up?
On average, Wall Street analysts predict that ROOT's share price could reach $4.38 by Feb 28, 2023. The average ROOT stock price prediction forecasts a potential upside of 247.22% from the current ROOT share price of $1.26.
Who is Root Insurance owned by?
Alex Timm //Alex Timm // CEO and Co-founder Root Insurance With a vision of completely transforming the insurance industry, Alex founded Root Insurance on the principle that rates should be based on driving behaviors, not demographics.
Does Root Insurance fail?
But then, the high-flying insurer will eventually go bankrupt when claims start coming in. Assuming Root Insurance avoids this path, its net earned premiums could still easily top $1 billion by 2022. The firm will have a negative book value, making it worthless by its balance sheet alone.
Are roots profitable?
Earnings and Revenue History Growing Profit Margin: ROOT is currently unprofitable.
What is a good score on Root insurance?
Root customer reviews and complaints The national standard is 1.00, and anything above that shows complaints are higher than normal.
Does Root track your speed?
When you apply for coverage, you'll get access to the Root car insurance app by downloading it to your smartphone. You'll need to bring your device with you when you drive for approximately two to three weeks. During your “test drive,” the app will track your driving behaviors — speed, braking habits, mileage, etc.
Is ROOT worth investing in?
The Root Inc stock holds a buy signal from the short-term moving average; at the same time, however, the long-term average holds a general sell signal. Since the longterm average is above the short-term average there is a general sell signal in the stock giving a more negative forecast for the stock.
Is Root insurance a good buy?
Root offers auto insurance rates that can be improved with good driving, but its customer service reputation is lacking. Root can offer better rates for good drivers and a solid user experience on its app. However, you may encounter customer service issues and you won't be able to get specialized coverages.
Should I invest in Roots?
The consensus among Wall Street research analysts is that investors should "hold" Roots stock. A hold rating indicates that analysts believe investors should maintain any existing positions they have in ROOT, but not buy additional shares or sell existing shares. View analyst ratings for Roots or view top-rated stocks.
Should I buy or sell Root stock right now?
11 Wall Street research analysts have issued "buy," "hold," and "sell" ratings for Root in the last twelve months. There are currently 1 sell ratin...
What is Root's stock price forecast for 2022?
11 Wall Street analysts have issued 1 year price targets for Root's shares. Their forecasts range from $1.50 to $12.00. On average, they anticipate...
How has Root's stock price performed in 2022?
Root's stock was trading at $3.10 at the beginning of the year. Since then, ROOT shares have decreased by 60.3% and is now trading at $1.23. View...
When is Root's next earnings date?
Root is scheduled to release its next quarterly earnings announcement on Wednesday, August 10th 2022. View our earnings forecast for Root .
How were Root's earnings last quarter?
Root, Inc. (NASDAQ:ROOT) announced its quarterly earnings data on Wednesday, November, 10th. The company reported ($0.53) earnings per share for th...
Who are Root's key executives?
Root's management team includes the following people: Mr. Alexander Edward Timm , Co-Founder, CEO & Director (Age 33, Pay $718.47k) Mr. Daniel C...
Who are some of Root's key competitors?
Some companies that are related to Root include First Commonwealth Financial (FCF) , KKR Real Estate Finance Trust (KREF) , Empire State Realty...
When did Root IPO?
(ROOT) raised $569 million in an IPO on Wednesday, October 28th 2020. The company issued 24,200,000 shares at a price of $22.00-$25.00 per share. G...
What is Root's stock symbol?
Root trades on the NASDAQ under the ticker symbol "ROOT."
What happened
Shares of the car insurance company Root (NASDAQ: ROOT) were down nearly 20% heading into the final hour of trading today after the company announced layoffs on Thursday.
So what
Root is laying off 330 employees, which is equal to 20% of its workforce. The company said in a regulatory filing that the move is being made due to inflationary pressure and in order to drive efficiency.
Now what
Root went public in October 2020 and debuted for about $24 per share. Since then, it's been all pain as the stock now trades at less than $1.90.
The Motley Fool
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community.
What is root insurance?
Root is an insurtech company in the auto insurance space. Through its mobile app, Root uses behavioral telematics and artificial intelligence to track how you drive and sets rates accordingly.
Is Insurtech still in the red?
The insurtech is still operating in the red with a net loss of $99 million in the first quarter, slightly better than a $105 million net loss a year ago. It only generated about $69 million in revenue, down from $124 million a year ago.
When did Root Insurance IPO?
It requires drivers to complete a virtual driving test through an app when they sign up for coverage. Root held its stock IPO in October 2020.
When did Root IPO?
Root held its stock IPO in October 2020. The IPO was oversubscribed going by the price hike and deal size. The company sold shares at $27 apiece, which was above the indicated range of $22–$25. It also sold 2.6 million shares more than originally planned. In the end, it raised more than $724 million.
What happens if you sell shares after a lockup expires?
If insiders rush to sell shares after the lockup expires, it could pull down a stock’s price. For example, Coupang (CPNG) stock fell sharply after its lockup expired. However, that happened after the stock rose sharply on the debut. Article continues below advertisement.
When does the Root IPO expire?
Root’s lockup expires on April 26.
Is root stock shorted?
Root stock hasn't just dropped to trade near its all-time low, it also stands out as one of the most heavily shorted stocks. It has a short interest of more than 40 percent. Investors wonder whether ROOT stock is on WallStreetBets' radar for a potential short squeeze.
About Root
Root, Inc. provides insurance products and services in the United States. The company offers auto, homeowners, and renters insurance products. The company operates a direct-to-consumer model and serves customers primarily through mobile applications, as well as through its website.
Headlines
The Secret to This Glazed Holiday Ham? Root Beer. - The New York Times
Root (NASDAQ:ROOT) Frequently Asked Questions
12 Wall Street analysts have issued "buy," "hold," and "sell" ratings for Root in the last year. There are currently 2 sell ratings, 8 hold ratings and 2 buy ratings for the stock. The consensus among Wall Street analysts is that investors should "hold" Root stock.
Summary
Root's share price is now down 85% from its IPO. Its market capitalization is just $1bn, compared to net cash of $764m.
Introduction: Why Is Root Stock Dropping?
Root, Inc. (NASDAQ: ROOT) shares reached another record low on Tuesday (November 23), falling below $4 for the first time at one point and closing at $4.10, 85% below its IPO price of $27 in October 2020.
Little Improvement in Q3 Results
Root's key financial and performance indicators for Q3 are shown below:
Smaller Losses in Q3 & Full Year Outlook
Root remains significantly loss-making. Operating loss was $127m in Q3 2021, close to doubling year-on-year; while this was better than Q2's $172m loss, the improvement was largely due to reduced Sales & Marketing spend:
Agreed Term Sheet on New Term Loan
Root finished Q3 with $966m of cash and $202m of debt, primarily two term loans (of $100m each) maturing in mid-October and 2024, respectively.
New Channels Reduce Telematics Focus
Root's product with Carvana will not be collecting telematics data initially, as Root CEO Alex Timm explained on the Q3 2021 earnings call:
Instability in More Key Personnel Changes
There have been more key personnel changes at Root, which we believe are indicative of instability at the business.
What is root insurance?
Root ( NASDAQ:ROOT) was founded on the belief that data and technology could disrupt a $260 billion auto insurance industry and eliminate the usage of credit scores, which it says are inherently biased. The auto insurer is known for its heavy use of telematics -- or driving data it collects from users' cellphones -- and its machine learning models ...
How much did Root lose in the first quarter?
Last year, Root posted a net loss of $363 million. In the first quarter of this year, the bottom line wasn't much better, with another net loss of nearly $100 million.
Does Root have a mobile app?
Root credits its mobile app for fast claims time, which gives it a rich dataset on claims. This in turn speeds up future claims times as a result, creating increasing efficiencies. Root currently has a big footprint in Texas, Georgia, Pennsylvania, Louisiana, Colorado, Utah, and Nevada, which account for half of its direct written premiums in ...
What is Root Insurance?
About Root Insurance: Root Insurance is the nation’s first licensed insurance carrier powered entirely by mobile.
Is the Shareholders Foundation a law firm?
The Shareholders Foundation, Inc. is not a law firm. Any referenced cases, investigations, and/or settlements are not filed/initiated/reached and/or are not related to Shareholders Foundation. The information is only provided as a public service. It is not intended as legal advice and should not be relied upon.
Is Root Insurance available in Wisconsin?
(NASDAQ: ROOT), the parent company of Root Insurance Company, today announced its entry into Wisconsin. Root is now available to the 4.3 million drivers in Wisconsin, making it the company’s 31st state. A fellow Midwesterner, Root was founded in Columbus, Ohio, and is thrilled to be available in more Great Lakes states. Roo
Root Insurance's earnings
Both WISH and ROOT released their earnings in Aug. 2021, and both releases disappointed markets and sent the stocks to all-time lows. As Root Insurance stock plummeted, we saw some bottom-fishing and Reddit ninjas jumped in. The stock is now among the most popular names on WallStreetBets.
Why is Root Insurance stock rising?
Root Insurance stock seems to have been driven by speculation of a short squeeze. Considering the magic that Reddit traders have managed to achieve in GameStop (GME) and AMC Entertainment (AMC), investors are scooping up stocks getting popular on the group. There may also be value buying happening after its crash.
Is a short squeeze happening in ROOT stock?
According to Fintel data, ROOT stock had a FINRA short volume ratio of over 60 percent on Aug. 27. Shorts have added to their positions as the stock rose, and the current short volume ratio seems high enough to trigger a squeeze.
Root Insurance's stock forecast
Meanwhile, Wall Street analysts aren't too bullish on Root Insurance stock. According to CNN Business, of the 14 analysts tracking ROOT, only two recommend “buy” or some equivalent, 11 recommend “hold,” and one recommends "sell." Their median target price of $7 is 9.5 percent above its closing price last week. In premarket trading on Aug.
How high can ROOT stock go?
Analysts' highest target price for Root Insurance stock is $13, more than double its current price. This target is based on the company's attractive business model of offering differential rates on auto insurance. Tesla has also been experimenting with the concept.
What makes Reddit love Root Insurance stock?
ROOT's high short interest seems to be attracting Reddit traders. A post on the group referred to a tweet from ham27 that highlighted the stock's narrow ownership and compared it to GameStop in Feb. 2021. It's worth noting, however, that the Reddit post began with a disclaimer: “I know nothing about the fundamentals of this stock.”
What is root insurance?
Root Insurance is a technology-based insurance company targeting to disrupt the massive auto insurance market using telematics. The company claims that traditional insurance companies suffer from “innovators dilemma”. I don't believe that is the case as competitors also use telematics. The company has an unusually high loss ratio.
What is the average loss ratio of Root Insurance?
In theory, by using telematics, Root Insurance should have a low loss ratio. However, the company’s average loss ratio is around 70-79%, with certain geographic locations having loss ratios exceeding 90%.
What is the loss ratio for auto insurance in 2020?
Furthermore, automobile insurance loss ratios tend to be between 60%-70%.
How much more do you pay for auto insurance with low credit?
People with low credit scores—even if they are the safest drivers—are paying as much as $1,500 more in annual premium payments than people with high credit scores. Company website (edited by author for brevity) Another thing to clarify is that the traditional auto-companies also use telematics to various degrees.
Does Root Insurance have a float?
What this means is that unlike other insurance companies, Root Insurance no longer manage s its float but rather passes off the risk to a re-insurance company. The re-insurance company gets roughly 70% of the premiums while Root Insurance keeps the rest of it as commission revenue.
Does Root Insurance use telematics?
Now just to clarify, Root Insurance does not rely 100% on telematics when determining insurance premiums. The company has indicated though that is the direction that they are headed and is leaning heavily on the technology as a differentiating factor.
