Why Shares of Root Stock Sank in December
Shares of Root (NASDAQ: ROOT) sank 27.3% in December, according to data from S&P Global Market Intelligence. The insurance technology (insurtech) upstart saw a pullback after gaining over 100% after fantastic third-quarter (Q3) earnings at the end of October. As a volatile stock, Root is still up over 500% in the last 12 months after it made a miraculous growth and profit turnaround in 2024. Thought to be close to bankruptcy, Root stock is still down 85% from all-time highs set close to when it went public in 2021.
Here's why Root stock pulled back 27.3% in December.
Root's aim is to bring digital technology to the car insurance market. Instead of basing its insurance policies on demographics and broad factors, Root uses smartphone technology to offer car insurance prices based on how people actually drive. The novel idea had a lot of backing in the 2021 bull market, with investors bidding up the stock with extreme fervor. In the years following, it looked like this idea would not work in practice as Root's net losses kept piling up, making it seem like the car insurance operator couldn't generate a profit.
Source Fool.com
