What happened

Shares of the insurtech company Root (ROOT -3.75%) had fallen nearly 10% as of 3:12 p.m. EST after an analyst at Barclays downgraded the company and assigned the stock a new price target.

So what

Barclays analyst Tracy Benguigui demoted Root from an equal-weight rating to an underweight rating, meaning she expects shares to underperform the industry as a whole. Benguigi also cut her price target on Root from $5 per share to $3 per share, implying a downside of roughly 40% from its current stock price.

Red line with arrow moving downward.

Image source: Getty Images.

Last week, shares of Root surged after the company reported earnings results for the third quarter of the year that beat analyst expectations. The company also provided a more promising outlook for the fourth quarter and 2022.

But since going public in October 2020, Root has not had an easy time, with shares down roughly 79%. The company is aiming to disrupt the auto insurance space by using behavioral-based analytics to determine insurance rates. Wall Street has not been impressed so far.

Now what

I think Root's concept is interesting and the company does have the potential to be a disruptor in the insurance space. But it's still early days and Root still has a long way to go to achieve profitability. At this point, I'd probably want to see more progress before dipping my toe in the water.