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…