Root, Inc. (ROOT): A Bull Case Theory

We came across a bullish thesis on Root, Inc. on Value investing subreddit by Creative-Cranberry47. In this article, we will summarize the bulls’ thesis on ROOT. Root, Inc.'s share was trading at $88.26 as of August 8^th. ROOT’s trailing and forward P/E were 17.17 and 3.50, respectively according to Yahoo Finance.

Root Insurance (ROOT) recently delivered its strongest quarter ever, crushing expectations with $382.9 million in revenue—13.2% above estimates—and an EPS of 1.457, beating estimates by 662%. This marks ROOT’s first trailing twelve-month profitable year, with a current TTM P/E of 16 and a forward P/E near 5, making it one of the cheapest growth stocks available. The company’s upbeat Q2 2025 guidance showed modest Policies in Force growth, a notable improvement from prior flat expectations, reflecting management’s growing confidence. A key driver of ROOT’s growth is its dominant partnership channel, which tripled new writings year-over-year and now includes over 7,000 independent agents since its Q4 public launch.

Despite accessing less than 4% of the independent agent market, ROOT aims to capture up to half in the coming years, potentially underwriting millions of policies and driving billions in revenue growth. This channel moat is supported by ROOT’s modern technology stack, enabling rapid updates, efficient quoting, and superior pricing compared to legacy insurers with outdated systems.

Nationwide expansion is progressing rapidly, with ROOT active in 35 states and aiming for full coverage by end-2026, further unlocking market potential. Its embedded insurance platform, partnered with over 20 major companies including Hyundai and Carvana, positions ROOT at the forefront of this growing segment. Technologically, ROOT’s AI-powered underwriting yields a best-in-class 58% loss ratio and exceptional operational efficiency, enabling it to be more than twice as profit-efficient as legacy peers.

Looking ahead, product diversification into home, specialty, and life insurance could boost revenues further. With tight float and high short interest, ROOT’s stock is volatile but offers exceptional upside. Under optimistic assumptions, ROOT’s valuation could exceed $60 billion, translating to a $2,074 price target, underscoring a compelling buying opportunity at current prices.

Previously, we covered a bullish thesis on Root, Inc. (ROOT) by Creative-Cranberry47 in May 2025, which highlighted strong Q1 earnings, rapid partnership growth, and nationwide expansion plans. The company’s stock price has depreciated by approximately 40% since then, despite solid execution. The thesis still stands as ROOT continues to deliver record results and expand its agent network. Creative-Cranberry47 shares an identical view but emphasizes even stronger Q2 earnings and growing market dominance.

Root, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held ROOT at the end of the first quarter which was 16 in the previous quarter. While we acknowledge the potential of ROOT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.