Root Insurance (ROOT) : performance since 2020 IPO

It has been a long fall from grace for Root, which went public in October of 2020 with a market capitalization of over $6 billion. The IPO was seen as a big win for Root’s venture-capital backers, especially Drive Capital and Ribbit Capital.

 

Founded in 2015 and based in Columbus, Ohio, Root is a tech-enabled insurance provider that uses AI and data science to determine customers’ rates more quickly and streamline the claims process. In 2019, the company expanded its reach when it introduced renters insurance.

Root’s public debut came after those of other technology-powered insurance providers including rate-comparison website SelectQuote (SLQT), SoftBank-backed Lemonade (LMND) and Hippo (HIPO).

Such companies were part of a wave of consumer-facing online-insurance startups that went public during the last venture boom. They have since experienced steep selloffs in their stocks, in part because it turns out the companies tend to have higher loss ratios associated with accidents by their customers. Root has incurred net losses on an annual basis since its inception.

The once-highflying Carvana invested $126 million in Root in August of 2021, getting convertible stock and warrants. The companies began a partnership to offer insurance to customers in 2022. Declining used-car prices postpandemic have dented Carvana’s sales and profits—and the value of the agreement for Root.

Root’s Chief Revenue and Operating Officer Daniel Rosenthal resigned from the company earlier this year. Root recently fired its former Chief Financial Officer and Treasurer Rob Bateman for cause, saying only that he violated unspecified company policies.

Hall has sold a number of his previous businesses, including insurance-tech startup Salty Dot, acquired by CDK Global, and Insurance Point, acquired by Arthur J. Gallagher & Co.

IPOs this week : Dec 28- 31, 20 (wk 53)

 

IPO lockup expirations

• Accolade (NASDAQ:ACCD) and Lemonade (NYSE:LMND) on December 29, 

• Beam Therapeutics (NASDAQ:BEAM) shares on December 30.

Lemonade (LMND) : 1-month performance

Lemonade (LMND) began trading on the NYSE on Thur 2 July 20

• Lemonade Inc. snagged 2020’s strongest initial public offering debut of a U.S. company as shares of the mobile-based insurance startup became the latest to more than double on their first day of trading. 

Lemonade (LMND) shares, which skyrocketed as much as 144% to hit an intraday high of $70.80, finished up 139% at $69.41 on Thursday, following an IPO pricing of $29 a share late Wednesday. That pricing was above an already increased IPO pricing to range of $26 to $28 a share, which topped a previous range of $23 to $26 apiece.

That’s the best debut for a U.S.-based company since shares of Inari Medical Inc. (NARI) closed at $42.51 on May 22, above its pricing of $19 for a 124% gain. American Depositary Receipts of Shanghai-based video-interaction company Agora Inc. did slightly better than Lemonade, jumping 152% on their first day to close at $50.50.


Most recently, shares of online used-car seller Vroom Inc. (VRM) closed at $47.90 on June 9 a day after pricing its IPO at $22, for a 117% gain, and ZoomInfo Technologies Inc. (ZI) shares closed at $34 on June 4, its first day of trading, after hitting an intraday high of $42 after pricing at $21.

Lemonade sold 11 million shares, with up to 1.7 million available to underwriters to cover overallotments. Taking into account those additional shares, Thursday’s close values the company at $3.93 billion.

Before the IPO, the company had already raised $480 million through several funding rounds, according to Crunchbase, with a $300 million round in April 2019 led by SoftBank Group Corp. 9984, +2.62% bestowing a “pre-money” valuation of $1.7 billion.

Lemonade prices IPO at $29 a share, higher than raised range

Lemonade Inc. (LMND), a mobile-based insurance start-up that seeks to court millennials, priced its initial public offering above the expected range Wednesday. 

After the close Wednesday, Lemonade priced 11 million shares at $29 apiece, above the already increased range of $26 to $28 from earlier in the day.

Underwriters have another 1.7 million shares to cover overallotments over the next 30 days. The stock is expected to begin trading under the ticker "LMND" on the New York Stock Exchange on Thursday.

The IPO price values the company at $1.64 billion should all options be exercised, just shy of the $1.7 billion valuation calculated from a $300 million investment led by SoftBank Group Corp. 9984, 2.29% in April 2019.

IPOs this week : June 29 - July 2, 20 (wk 26)

IPOs expected to price

• DoubleDown Interactive (NASDAQ:DDI) and Dun & Bradstreet (NYSE:DNB) on June 30, as well as 
• Accolade (NASDAQ:ACCD) and Lemonade (NYSE:LMND) on July 1. 

IPO quiet period expirations

• Warner Music Group (NASDAQ:WMG) and Pliant Therapeutics (NASDAQ:PLRX) on June 29, as well as 
• ZoomInfo (NASDAQ:ZI), Applied Molecular (NASDAQ:AMTI) and Shift4 Payments (NYSE:FOUR) on June 30. 

All five of those stocks have rallied since their debut, from Warner Music's 22% gain to ZoomInfo's 142% pop.

IPO lockup expirations

• Northstar Gold (OTCPK:NSGCF). 

Across the Pacific, IPO debuts for Kangji Medical ($404M), Gan & Lee Pharmaceuticals ($360M) and Hygeia Healthcare ($286M) are on tap.

Online insurer Lemonade seeking New York IPO

Firm founded by Israeli entrepreneurs Shai Wininger and Daniel Schreiber will seek to raise more than $500 million to expand operations

• By replacing brokers and bureaucracy with bots and machine learning, Lemonade promises zero paperwork and instant everything. And as a Certified B-Corp, where underwriting profits go to nonprofits, Lemonade is remaking insurance as a social good, rather than a necessary evil.
• Founded date 2015
• www.lemonade.com

Lemonade co-founder Shai Wininger at his office in Tel Aviv on December 20, 2017 

Daniel Schreiber

management

New York-based Lemonade Insurance Company, founded by Israeli entrepreneurs Shai Wininger and Daniel Schreiber, who seek to revolutionize the way homes are insured, are planning to hold an initial public offering of shares on a New York exchange, Calcalist reported without saying where it got the information.

The firm is seeking to raise more than half a billion dollars, at a market valuation of $2 billion, the financial website reported Tuesday.

The share issue, if successful, would make the share sale one of the most highly valued IPOs by an Israeli-linked firm, Calcalist said. Mobileye, founded by Israeli entrepreneurs Amnon Shashua and Ziv Aviram, holds the record today, having sold shares in 2014 on the New York Stock Exchange at a valuation of $5.3 billion, Calcalist said. Mobileye was later acquired in 2017 by Intel Corp. for a whopping $15.3 billion.