(Bloomberg) -- Root Inc. shares are having their best day ever on Thursday after the auto insurance platform announced that it had turned profitable for the first time in its history.
The Columbus, Ohio-based firm’s stock price soared as much as 192%, its biggest intraday advance on record. It has since trimmed some of those gains but was still up more than 150% at mid-session, jumping to around $103 from Wednesday’s close of $40.49 and adding almost $1 billion in market capitalization. The shares have soared roughly 875% this year.
In addition to reporting third-quarter net income of $23 million, reversing Wall Street’s anticipated $16 million loss, Root’s revenue came in a $306 million, far surpassing $115 million a year ago and Wall Street’s expectations of $273 million.
“We have consistently said that our top priority has been to reach profitability and, in the third quarter, we delivered it,” Alex Timm, the company’s chief executive officer and co-founder, said on the company’s earnings conference call after the market closed Wednesday. “This is a pivotal moment for Root.”
Timm noted on Root’s second-quarter earnings call that the company was approaching the milestone.
Root shares have had a rough ride since their initial public offering in October 2020. The stock fell from $486 in its debut to $40.49 at Wednesday’s close, shedding more than $6 billion in market capitalization along the way.
In particular, Root’s “substantial improvement” in net combined ratio — a measure of how much an insurer spends on claims and expenses as a percentage of property and casualty premiums — was key, according to JMP Securities analyst Matthew Carletti.
“Sustained improvement in loss ratios, alongside a rebound in top-line growth, gives us increasing confidence Root has exited the turnaround phase and moved into one we believe will see the company continue its progression toward sustained profitability,” he wrote in a note to clients Thursday.
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