Hippo Earnings: Better Revenue, Long Path to Profitability

Hippo released its' Third Quarter Earnings with positive improvements across all metrics. From the Hippo shareholders letter:

Hippo EBITDA loss was narrowed: $30.9 million or $.08 per share vs $38.6 million and $.44 per share in the previous quarter.

Hippo raised its' full year for total generated premium from a range of $560- $570 million to $ 600 -$605 million.

The company continues to execute on its' business plan and expanded relationships with mortgage issuers. Average premium is $1200. Although the loss ratio has improved it is still at a level that must be reduced further. However it is important to note that Hippo retains only 10% of its risk reinsuring the rest. Unlike Lemonade to which it is often compared Hippo gains a great deal of its revenue from commission revenue ($6.6 million) and service and fee income ($3.7 million) virtually equal to the premium income ($10.9 million).

The stock is no doubt extremely volatile. Hipo doesnt have extensive analyst coverage. A Jeffries analyst began coverage of Hipo as a buy with a price target of $8 on November 19 which helped the stock. But in trading on Monday Nov. 22 the stock dropped sharply to $57.40