During his first Executive Decision segment of "Mad Money" last Friday, Jim Cramer spoke with Dan Preston, CEO of Metromile Inc. (MILE) , the operator of a digital insurance platform that charges its customers by the mile for their auto insurance instead of a standard flat rate.
Preston said Metromile's insurance is tailored to the individual, and low-mileage customers can save up to 47% off of traditional fixed rates. Traditional insurance is a commodity, Preston added, which is why insurance companies spend billions to keep their names top of mind. At Metromile, most of its business comes from referrals, which dramatically lowers its cost.
Let's check out the charts.
In this daily Japanese candlestick chart of MILE, below, we see a lot of red (bearish) candles. We do not have a lot of trading history, but the slopes of the 20-day and 50-day moving average lines are negative. The On-Balance-Volume (OBV) is pointed down, telling us that sellers of MILE have been more aggressive. The 12-day price momentum study shows a higher low from March to April to give us a bullish divergence when compared to prices making lower lows. The pace of the decline has slowed and that could be due to scale-down buying from investors with foresight about the fundamentals.
In this daily Point and Figure chart of MILE, we can see that prices met and exceeded a downside price target of $9. Reaching a price target does not make it a buy, in my opinion.
Bottom line strategy: MILE could stage a bounce or a price recovery in the short run, but I do not see a sustained advance until a proper base is made.