(Reuters) - Shares of Root Inc ROOT.O closed flat in their Nasdaq debut on Wednesday, marking a muted open for the automobile insurance startup after it raised around $724 million in its initial public offering (IPO).
The stock closed at $27, valuing Root at around $6.5 billion and unchanged from its IPO price. The company’s shares had opened at $26 apiece.
Root’s market debut comes against the backdrop of the S&P 500 and the Dow hitting their lowest levels since late-September, as coronavirus cases surged globally and fears of a contested U.S. presidential election added to worries.
The startup, which provides insurance to customers through mobile apps, is among several firms vying for a share in the online financial products market that has seen a boost due to the COVID-19 pandemic.
“There will be some short-term noise from COVID - with less driving - but I think that will normalize,” Alexander Timm, chief executive officer and co-founder of Root, said in an interview with Reuters.
Technology stocks have also seen increased interest in recent times, given the sector's resilience through the pandemic. For instance, the technology-heavy Nasdaq index .IXIC has gained about 26% this year, outperforming its Wall Street peers on strength in major technology stocks.
U.S. automobile sales are also expected to pick up in October after a coronavirus-induced lull, thanks to pent-up demand and tighter inventories, two industry consultants said.
“You’re going to see pretty large market-share shifts (in the automotive insurance industry), that are driven by competitors that have modern technology,” Timm added.
Goldman Sachs, Morgan Stanley, Barclays and Wells Fargo Securities are the lead underwriters for Root’s offering.
Reporting by Ambar Warrick in Bengaluru; Editing by Ramakrishnan M., Maju Samuel and Peter Graff
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