Rose Celine Investments
Equity Investor
Root looks expensive at 16x next year's earnings when insurers usually get 12x. Fair value is about $29.78-37.90, or 12x next year's expected $2.82 EPS give or take 12%, so the stock trades about 22% above the top of that range. The view rests on reported earnings and estimates only, with no fundamental work. x.comÂ
Pagaya, Upstart and Root are money-losing companies, not a rebound story. They pay no dividends, so their yield is zero, and any comparison with the 2021 SPAC-peak mania is not a long-term trend. This rebuts a post the author replies to, which argued these fintechs show steady quarter-over-quarter EPS growth on sustainable revenue, trade at 10-year lows with rising dividend yields, and could 2x or 3x. x.comÂ
Root is cheap and could be a better buy than Lemonade here, because it is proving it can grow and make money at the same time. It picked the difficult personal auto market and executed exceptionally, with underwriting improving quarter after quarter and capital-efficient scaling showing up as high ROIC. The market will likely reward that. The choice versus Lemonade, which is building a long-term insurance brand, remains nuanced and depends on what an investor wants. x.comÂ
Ethos is getting bubbly, and at $40 it is time to exit. Its ceiling is also structurally lower than Lemonade's: Ethos underwrites with its app but never holds the policy, so it earns mostly upfront fees from partner insurers rather than monthly premiums on policies it carries. That keeps it out of the top four fintech names. x.com x.comÂ
Hippo Holdings looks too risky as a turnaround story focused on home insurance, one of the worst lines because big events such as wildfires create heavy losses. x.comÂ
Better underwriting at Root, AI data demand at Innodata, defense breadth at Applied Aerospace & Defense, scaled voice AI at SoundHound, more organ access via TransMedics, profitable insurance at Lemonade, autonomous defense at Ondas and successful medicines at AbCellera could drive outsized growth. These eight smaller companies have a realistic path to 5x+ over 5-10 years if they execute on those opportunities. x.com x.com x.com x.com x.com x.com x.com x.comÂ
Lemonade looks expensive once valued as what it is, an insurance company. Replying to @javierluraschi's post on the stock, any price above 1x revenue is expensive for an insurer. x.comÂ
Goosehead Insurance offers better hunting elsewhere, despite its appeal in isolation. It targets low-level insurance markets with heavy competition, including self-service options such as Progressive, and its founders have already cashed out big. x.comÂ
Root, the car insurtech company, has a huge market and trades at a single-digit P/E if its first-quarter results hold. x.comÂ
UnitedHealth's model is a conflict of interest, since it owns both the insurer and the doctors and data, which makes it too dark to own. It has been accused of using algorithms to systematically deny care to the elderly and sick to lift profits; as both the largest US employer of doctors and an insurer, the patient loses. The assassination of its CEO showed deep hostility toward that system. A moat built on denying care is not worth owning. x.comÂ