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 : November 16 - 20, 20 (wk 47)

 IPOs expected to price

• Aspire Real Estate Investors (ASPI)
• NeoGames (NGMS), 
• Telos (TLS), 
• Sotera Health (SHC) and 
• Maravai LifeSciences (MRVI) 

Maravi appears to be the largest of the bunch, with the biotech looking to raise $1.275B. There is also some speculation that e-retailer Wish and kids gaming company Roblox (RBLX) could file for an IPO next week to follow on DoorDash's (DASH) filing from Friday. 

IPO quiet period expirations

• Guild Holdings (NYSE:GHLD), McAfee (NASDAQ:MCFE) and Datto (NYSE:MSP) on November 16. 

IPO lockup expirations

• Chewy (NYSE:CHWY) and 89bio (NASDAQ:ETNB) on November 16, 
• Avantor (NYSE:AVTR), Futu Holdings (NASDAQ:FUTU) and SelectQuote (NYSE:SLQT) on November 17.

IPOs this week : Nov 9 - 13, 20 (wk 46)

IPOs expected to price

• Aspire Real Estate Investors (ASPI), NeoGames (NASDAQ:NGMS), Telos (NASDAQ:TLS), Sotera Health (NASDAQ:SHC) and Maravai LifeSciences (NASDAQ:MRVI) are all expected to price their IPOs next week. 

Maravi appears to be the largest of the bunch, with the biotech looking to raise $1.275B. 

There is also some speculation that e-retailer Wish and kids gaming company Roblox (RBLX) could file for an IPO this week to follow on DoorDash's (DASH) filing from Friday. 

IPO quiet period expirations

• Guild Holdings (NYSE:GHLD), McAfee (NASDAQ:MCFE) and Datto (NYSE:MSP) on November 16.   

IPO lockup expirations

• Chewy (NYSE:CHWY) and 89bio (NASDAQ:ETNB) on November 16, as well as 
• Avantor (NYSE:AVTR), Futu Holdings (NASDAQ:FUTU) and SelectQuote (NYSE:SLQT) on November 17.

IPOs this week : June 15 - 19, 20 (wk 24)

IPOs expected to price

• Royalty Pharma (RPRX) is expected to price its IPO on June 16. 

IPO quiet period expirations

• The analyst quiet periods expire on June 15 for SelectQuote (NYSE:SLQT), Windtree Therapeutics (OTCQB:WINT) and Inari Medical (NASDAQ:NARI).

IPO lockup expirations

• Indonesia Energy (NYSEMKT:INDO) and Monopar (NASDAQ:MNPR) on June 18. Across the Pacific, JD.com's (NASDAQ:JD) secondary offering in Hong Kong will begin trading on June 18. The company is looking to raise as much as $2B.

SelectQuote (SLQT) began trading on the NYSE on Thur 21 May 20

SelectQuote is the first major tech company to go public since the coronavirus began ravaging the stock market. SelectQuote allows consumers to compare quotes for insurance policies online. It is a competitor to EverQuote (EVER), which has seen its stock soar this year.

• SelectQuote priced upsized 28.5 mln share IPO at $20, above the $17-$19 expected price range. The IPO was originally expected to consist of 25.0 mln shares. In all, the deal raised $570 mln in total gross proceeds.
• The lead underwriters on the deal were Credit Suisse, Morgan Stanley, Evercore ISI, RBC Capital Markets, Barclays, Citigroup, and Jefferies.

NEW YORK (Reuters) - U.S. insurance policy comparison website SelectQuote (SLQT) raised $360 million after selling shares in its initial public offering (IPO) above its target range on Wednesday.

SelectQuote’s offering is the latest sign of thawing in the IPO market, which was shut to most companies when the coronavirus outbreak fueled weeks of stock market volatility in March and April. Only a handful of biotechnology and blank-check companies went ahead with IPOs during this period.

Since late February, the Cboe Volatility Index , known as Wall Street’s fear gauge, has been above the 20-point threshold that most IPO hopefuls monitor to gauge investor jitters. But it has trended downwards in recent weeks, giving some companies confidence to test the market.

SelectQuote allows consumers to compare insurance policies for life, auto and home insurance from providers including American International Group (AIG), Prudential Financial Inc (PRU) and Liberty Mutual.

The biggest IPO by a company that is neither a biotechnology firm nor special purpose acquisition company since the onset of the pandemic was by Chinese cloud computing company Kingsoft Cloud Holdings Ltd (KC), which raised $510 million in its U.S. stock market debut earlier this month.

Overland Park, Kansas-based SelectQuote said it sold 18 million shares as planned, and existing shareholders sold 10.5 million shares, up from 7 million, at $20 each as part of the IPO. The company had set a target range of between $17 and $19 per share.

The IPO valued SelectQuote at $3.25 billion. The pricing of the IPO was brought forward by a day on the back of strong investor demand. Shares of SelectQuote peer EverQuote Inc (EVER) hit a record high earlier this month, after the company increased its full-year revenue and adjusted EBITDA forecast. EverQuote also said it expects the virus outbreak to accelerate the digitization of the insurance industry. While using websites to compare and buy insurance products is commonplace around the world, the U.S. insurance industry has been slower to embrace technology as means of bypassing traditional insurance brokers.

For the nine months to the end of March, SelectQuote posted $390.1 million in revenue, up almost 50% year on year while net income edged up 2.4% to $61.1 million.