Insurtech Lemonade Shares Dip in Anticipation of Lock Up Expiration

Lemonade (NYSE:LMND), a fast-growing Insurtech that emerged as one of the most successful initial public offerings (IPOs) of 2020, is seeing shares dip today in anticipation of the lockup expiration for early shareholders. Lemonade shares are trading down around 12% in an up-market day.

According to a report by Bloomberg, about 44 million shares will be able to trade tomorrow. The lock-up expiration allows early investors to collect profits in a security that has risen dramatically since it listed on the NYSE in July of 2020.

Earnings for Q3 showed that Lemonade’s gross earned premium was $42.9 million, an increase of $21.9 million or 104% as compared to the third quarter of 2019. Total revenues were $17.8 million – so the company is pretty small in comparison to traditional insurance firms. But Lemonade is tech-heavy and customer-friendly insurance company, characteristics that are driving growth in the US and several countries in Europe. Total customers are just under one million growing by 67%  year over year in Q3. Some analysts see a bright future for the Insurtech as it seeks to provide a service that differentiates itself from old insurance that tends to be despised by customers.

As for shareholders that may sell tomorrow, don’t feel too sorry for today’s decline. Shares IPOed at $29 in July so if they sell they stand to generate over a 3X return – a nice reward for backing the company when it was just a risky startup.

 

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