“Rarely do investors get the opportunity to invest in a disruptive technology company at a significant discount to the prices paid by the leading tech investors in the world who had the ability to do a deep dive into the technology and cohort data,” the firm, led by Andrew Left, wrote in a commentary.
Those investors include Silver Lake, Tiger Global and Redpoint Ventures.
Root recently traded at $14.12, up 9.7%. Through the close of Thursday trading, the shares had dropped more than 50% from their October initial public offering at $27.
“Root is the only insurance carrier where 100% of customers have the company’s mobile app installed," Citron said.
The company uses the app "to collect better data that gives Root a ‘four-year head start’ in being able to better price insurance on actual driving behavior,” Citron said.
“With over 10 billion miles of driving data and hundreds of thousands of actual claims, Root has the best data analytics in the industry.”
Further, “Last year was a bad year for an auto insurance company to go public, with so much uncertainty around the future of the business due to COVID,” Citron said.
“Even the bears will admit, ROOT has great management that knows insurance and technology. … ROOT has done a poor job of telling their story to Wall Street.”
But it can easily turn that around, Citron said.