Metromile: Good Progress In Q1, But Still Above 10x Premiums (Preview)

Company Update (MILE US) (Neutral)

Summary

• Metromile stock has halved since listing. We believe its consumer proposition makes sense, and its operations have continued to improve.

• Metromile has delivered solid growth in Q1 2021 and is guiding to an approx. 39% growth in its number of policies for full-year 2021.

• The Loss Ratio has continued to improve, and the company has $222m of cash, likely enough to fund its expansion well into 2022.

• However, at $8.40, the stock is trading at more than 10x Premiums in Force, outside our valuation parameters. Avoid.

Introduction

We revisit Metromile three months after we initiated a Neutral rating on the company and after Q1 2021 results were released earlier this month.

Since our Neutral rating, Metromile stock has fallen by another 30%, and has now halved from the closing price on February 11, the day on which Metromile went public by a Special Purpose Acquisition Corporation ("SPAC") merger.

Metromile has the potential to significantly disrupt the U.S. auto insurance market, and it is ma…