SCHEDULE: Carvana Boosts Root Stake as Warrants Become Exercisable

Carvana Group, LLC and its affiliates have increased their beneficial ownership in Root, Inc. to 21.2% as additional performance-based warrants became exercisable.

Summary

• Carvana Group, LLC and its affiliates now beneficially own an aggregate of 3,708,454 shares of Root, Inc. Class A Common Stock.
• This beneficial ownership represents approximately 21.2% of Root's outstanding Class A Common Stock, calculated pursuant to Rule 13d-3.
• On a fully-diluted and as-converted basis, the aggregate amount represents approximately 19.3% of the total Common Stock of Root, Inc.
• The reported securities consist of 780,727 shares of Class A Common Stock issuable upon conversion of 14,053,096 shares of Preferred Stock.
• Additionally, 2,927,727 shares of Class A Common Stock are issuable upon exercise of Exercisable Warrants held by Carvana Group, LLC.
• Tranche 2 Warrants, representing the right to purchase 1,491,907 shares of Class A Common Stock at an exercise price of $225.00, became exercisable on February 28, 2026.
• The exercisability of Tranche 2 Warrants was contingent upon the achievement of certain insurance sales metrics through the integrated automobile insurance solution for Carvana Group, LLC's online car buying platform.
• Tranche 1 Warrants, for 1,435,820 shares at an exercise price of $180.00, previously became exercisable on September 1, 2025, under similar conditions.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development, as the exercisability of warrants indicates successful achievement of performance milestones in the strategic partnership between Carvana and Root.

Positives

• Tranche 2 Warrants, representing 1,491,907 shares of Class A Common Stock, became exercisable on February 28, 2026, indicating the successful achievement of specific insurance sales metrics through the integrated platform.
• The increase in Carvana's exercisable stake in Root suggests positive progress in their strategic partnership and the performance of the integrated automobile insurance solution.

Risks

• The remaining three tranches of Warrants are subject to certain conditions to exercise, including relating to the achievement of additional defined milestones tied to insurance sales through the Integrated Platform, which may not be met.

Future Outlook

The remaining three tranches of Warrants are also subject to certain conditions to exercise, including relating to the achievement of additional defined milestones tied to insurance sales through the Integrated Platform, indicating potential for further increases in Carvana's stake.

Industry Context

StockSavvy.ai notes that the increased exercisability of Carvana's warrants in Root, tied to insurance sales metrics, highlights the ongoing strategic importance of the partnership between an online automotive retailer and an auto insurance provider. This integration aims to create a seamless customer experience and potentially drive cross-selling opportunities, a trend observed in various sectors seeking to bundle complementary services.

Comparison to Industry Standards

• StockSavvy.ai observes that strategic equity investments tied to performance milestones, such as Carvana's warrants in Root, are a common mechanism for fostering partnerships and aligning interests in the tech and automotive sectors.
• While specific comparable companies or projects are not detailed in the filing, similar arrangements exist between technology platforms and service providers, where equity stakes are used to incentivize integration success and market penetration.
• For example, partnerships between ride-sharing companies and autonomous vehicle developers often include milestone-based investments to ensure strategic alignment and shared success.

Related Party Transactions

• Carvana Group, LLC holds Preferred Stock and Warrants of Root, Inc., which are tied to the performance of an integrated automobile insurance solution on Carvana Group, LLC's online car buying platform. This represents an ongoing strategic related-party arrangement.

Stakeholder Impact

• Shareholders (Root, Inc.): Increased potential for dilution if Carvana exercises its warrants, but also a signal of Carvana's continued commitment and the success of the integrated platform, which could be viewed positively.
• Shareholders (Carvana Co.): The exercisability of warrants represents a potential increase in their stake in Root, Inc., based on achieved performance metrics, which could be seen as a positive return on their strategic investment.
• Customers (Carvana/Root Integrated Platform): The achievement of insurance sales metrics suggests the integrated platform is gaining traction, potentially benefiting customers through a streamlined experience.

Next Steps

• Achievement of additional defined milestones tied to insurance sales through the Integrated Platform for the remaining three tranches of warrants to become exercisable.

Key Dates

Recommendation

This filing primarily updates beneficial ownership due to warrants becoming exercisable, reflecting the achievement of internal performance metrics. While positive for the strategic partnership, it doesn't provide new financial performance data for Root, Inc. to warrant a strong buy or sell recommendation. Investors should hold and monitor future operational results and the exercise of remaining warrants.

Keywords

Root Inc, Carvana, Schedule 13D, beneficial ownership, Class A Common Stock, warrants, preferred stock, insurance sales metrics, integrated platform, strategic partnership, auto insurance, equity stake