Key insights
- The author discusses their investment in Root Insurance ($ROOT), highlighting its potential deep value due to its low market cap relative to revenue and expansion into new distribution channels. However, growth has slowed, and analyst revenue growth estimates are low. Overall, the post presents a mixed outlook with potential upside but significant risks, leading to a slightly negative influence on the broader market.
I’ve been both a customer and investor in $ROOT for 9 months. I saved $650 annually by switching from State Farm (insurer for 13 years) and I maxed out my coverages. It overall took 10 minutes maybe a bit less to become a client.
It has fallen from $180 in March ‘25 to $47/share today. Since then, growth has slowed, but it’s GAAP profitable and growing distribution at the point of sale. It started with $CVNA, expanded to KIA/Hyundai (still rolling out dealer by dealer from what I’ve heard), and now they’re tackling Consumer Direct marketplaces like Kikoff as well as high trust, high retention channel like Independent Agents.
This company seems like a real value investor’s dream given the steep drop off. The market cap is half that of their annual revenue, and analysts believe it’ll only grow rev 6% this year.
Thoughts on this? I’m staying in regardless but I like hearing what others think. I like to stress test my own conviction.