Editor’s Note: Karim and Bryan Bottarelli are going LIVE on Wednesday @ 1 p.m. ET for our first-ever FOMC watch party.
Trump and Powell have been going at it for months now…
And on Wednesday, Karim and Bryan will break down how this interest cut decision will have lasting implications for your money for the long haul. It’s 100% FREE and live!
Click here to add the Trump vs. Powell FOMC Watch Party to your calendar
— Ryan Fitzwater, Publisher
Sometimes the best setups emerge when everyone has already thrown in the towel. ROOT’s sitting at $100 right now, and I’m looking at this thinking, ‘Yeah, this could get really interesting if it gets going.’
Here’s what happened: This thing got absolutely murdered from $181 highs all the way down to $84 after it announced earnings.
But it wasn’t because the business broke – it’s because Wall Street decided to punish anything insurtech-related.
You know how it goes – when sentiment shifts, everything in a sector gets painted with the same brush.
The Disconnect I’m Seeing
ROOT isn’t some failing company.
They’re the leader in embedded insurance – basically getting insurance built right into car purchases instead of fighting for customers through expensive ads.
Think about it: when you buy a car from Hyundai or Carvana, ROOT’s right there at the point of sale. That’s a structural advantage that should let them scale way faster than legacy insurers still stuck in old distribution models.
The market they’re chasing?
$100 billion by 2030 as embedded insurance hits 20% of auto policies. And ROOT’s already got the partnerships locked up.
Why I’m Adding to ROOT Here
The structure is coming together in my humble opinion.
We broke that downtrend line, came back to retest it, and now we’re holding above VWAP with some nice squeeze patterns developing. The 30-minute chart looks phenomenal – this is really coming together if we can get up and over the $108-110 area.
But here’s the kicker – 15.92% short float.
All those people who shorted this thing because “insurtech is risky” are now sitting there watching it bounce back.
The Math Doesn’t Lie
- Founder-led with 12% insider ownership (they’re not selling)
- Actually profitable unlike most insurtechs
- Trading at massive discount to peers like LMND (4.0x sales)
- EPS up 192% year-over-year
- Growing way faster than legacy insurers at fraction of the valuation
The fundamentals aren’t the problem here.
This was Wall Street deciding insurtech = bad, sell everything. That’s when you get opportunities.
My Setup
I’ve got positions in the $100 and $110 calls, and I’m thinking this has 10%+ upside from here if it can break through that $108-110 resistance.
That gets us into the $111-112+ range, which opens the door for this thing to really rip.
We’re buying after the washout at 0.618 fib retracement level.
If those shorts start covering and we get some momentum shift back into growth names…
Your Action Plan
I’m looking at this as a swing into October. Give it time to work, let those squeeze patterns develop, maybe get a sector rotation back into quality growth stories trading at discounts.
Will this work?
We’ll see.
But when you find a profitable, fast-growing leader in a massive TAM trading at fire-sale prices because of sector sentiment – that’s usually when things get interesting.
The embedded insurance thesis isn’t going away. ROOT’s partnerships aren’t disappearing. Sometimes you just have to be patient while Wall Street figures out what they threw away.
As always, do with it what you will. But that’s where I’m at on this thing.
And if you want to follow along, you can get my alerts in Daily Profits Live.