- Shares of heavily-shorted Root spiked nearly 20% Friday before paring gains following an encouraging report from Citron's Andrew Left.
- Left said the auto-insurance company is a "misunderstood short" and has the best data analytics in the industry.
- Left made headlines in January as one of Wall Street's most outspoken GameStop short-sellers.
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Shares of Root jumped as high as 19.7% Friday morning as Citron's Andrew Left published a report saying the highly-shorted auto-insurance company is "a misunderstood short."
"This is a disruptive tech company and investors have an opportunity to buy the stock at bargain prices vs. what the smartest tech investors in the world paid just five months ago," the Citron Research founder said.
At Thursday's close, Root was down 52% since its initial public offering in October. The auto insurance company is one of the most heavily shorted stocks in the market. It spiked to $15.44 a share before paring some gains Friday.
Root uses smartphone data to track drivers' habits which it then uses to price risk. According to Left, Root has the "best data analytics in the industry" and can disrupt the $266 billion auto insurance industry.
"There is no reason this stock is worth less than its IPO price of $27. This is at the crosshairs of disruptive technology and an ESG trend that is too strong to ignore," said Left. If Root trades at insurance start-up Lemonade's multiple, it could reach $65 a share, more than quadrupling in price.
Left added that Root has done a poor job telling its story to Wall Street, and the stock is down because there was uncertainty around the future of the insurance business during the pandemic.
Left also said that Root's shareholders including Silver Lake, Coatue, Redpoint Ventures are the "best tech investors in the world."
"Can you fool one smart guy? Yes. However it is tough to fool many smart guys," Left added.
Left made headlines in January as one of Wall Street's most outspoken GameStop short-sellers.He had to cover a majority of his GME short positions at a 100% loss.
In late January he said that Citron Research would no longer publish "short reports," and instead focus its efforts on long-only investment opportunities for individual investors.