What happens when Wall Street falls out of love with your sector?
It’s been an awful week for public neoinsurance companies. A subsector of the larger insurtech world, neoinsurance providers tackled a number of insurance categories using a blend of modern app design and machine learning in hopes of creating more user-friendly and profitable insurance products.
The idea proved attractive to venture capitalists, who invested in a host of companies working on the problem space. And it went so well that in the last year or so we saw a number of U.S. neoinsurance companies go public.
The Exchange explores startups, markets and money.
Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.
That’s the extent of the good news. Since the IPOs and SPAC combinations that took MetroMile, Hippo, Lemonade and Root public, the group has seen their values either decline sharply below their initial trading prices or far under their recent highs.
We’ve covered some of these declines in recent weeks and wondered if we should be worried about neoinsurance valuations and how they may impact startups. This morning, we’re examining what happened to neoinsurance companies this week, why, and which startups could be impacted.
Grounding our work is an interview that The Exchange held with Root CEO Alex Timm in the wake of his company’s earnings report. It’s a pretty illustrative example of where the sector finds itself today: Flush, busy and somewhat unloved.
Recent declines
Measuring from last Friday’s closing price to yesterday’s, here’s a digest of where the market is for public neoinsurance companies:
- Hippo: -20%.
- MetroMile: -30%.
- Root: -23%.
- Lemonade: -6%.
Declines from recent highs are more extreme for several of the now-public neoinsurance companies, something that we discussed last Friday. The point we made then has only become more acute. We could add names to this list, like Oscar Health, but health insurance feels sufficiently distinct from the above companies that I don’t want to muddy the waters.
What’s new in all of this is that the value of some of these companies is getting close to their cash balance. Or more simply, they are trending toward basement-level enterprise values. Here’s the data:
It’s been an awful week for public neoinsurance companies. A subsector of the larger insurtech world, neoinsurance providers tackled a number of insurance categories using a blend of modern app design and machine learning in hopes of creating more user-friendly and profitable insurance products. The idea proved attractive to venture…
Recent Posts
- Apple’s latest AirPods Pro with USB-C have returned to their all-time low
- Hisense’s new 5,000 nits mini-LED TV is so bright you may need to wear shades
- The drinking fountain button is tragically misunderstood
- Google fired a software engineer over an anti-war demonstration — he says he wasn’t even protesting
- Amazon expands enterprise AI play with wider availability of its Q chatbot
Archives
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- December 2011