Lemonade shares increased to $93.74, up 1.74%, by midday on Thursday. As
at close of trading, Lemonade's stock was trading at a volume of 2,257,597. The market value of their outstanding shares
is at $5.5 billion.
In the next
earnings report analysts’ Consensus Estimates are calling for earnings of
-$3.20 per share and revenue of $115 million. These totals would mark changes
of +11.85% and +21.82%, respectively, from last year.
The Actual Recommended Trade…..
** OPTION TRADE: Buy LMND
APR 30 2021 90.000 CALLS at approximately $3.85.
(actually bought for $2.65)
The Days Trading Explained…..
Options Members” entered a Lemonade weekly options trade on Thursday,
April 22, 2021 at 9:51am for $2.65.
By 10:49am (58 minutes later) the price
of the option was up to $5.70 – a nice profit of 115%.
The stock price of Lemonade receded from
this point providing another opportunity to enter the trade after taking a good
profit. This entry took place at 1:53pm for a cost of $3.30.
As at close on the trading day, the
option price had already increased to $4.04; further potential profit of 22%.
Therefore, if the market rallies Friday further
profit can be expected.
Why The Trade Recommendation On Lemonade?
After losing steam recently many of the
so-called "reopening stocks" and SPACs are starting to rally,
particularly Lemonade Inc (NYSE: LMND).
The stock market was having a generally strong
day on Wednesday, with all three major averages in positive territory., and
Lemonade is now coming back to life.
Lemonade was one of the highest-momentum
stocks heading into 2021 and has lost about half of its value since its January
peak, and was down by about 20% over the past month alone prior to today's
Lemonade wants to revolutionize the insurance
industry, which it sees as ripe for disruption. It works with artificial
intelligence (AI) and data mining to provide a faster and simpler user
experience for a target market that's used to online shopping and video
When Lemonade went public last July, it only
sold homeowners and renters insurance. At the beginning of the third quarter,
it launched pet insurance, and at the beginning of the fourth quarter, it
introduced term life insurance. Both of these ventures work within the same
AI-driven model and digitally powered system as the homeowners and renters
products, with fast approval sans human interaction.
The Major Catalysts for This Trade.....
into Auto Insurance.....
On Tuesday Lemonade announced a major expansion of its business today. The company, which
primarily sells renters, homeowners, and pet insurance, added term life
insurance earlier this year. Now, Lemonade is expanding into auto insurance,
which could be a huge growth
driver over the next few years.
Lemonade announced that it plans to
launch its Lemonade Car auto insurance platform by the end of the year, and
early registration for interested customers is now live on the company's
Why auto insurance?
- Auto insurance is a massive
addressable market. In the United States alone, it is estimated to be a $300
billion industry, roughly 70 times the size of Lemonade's core renters and pet
- Lemonade's customers want to buy
their auto insurance through the company. The easy process of buying renters,
homeowner, or pet insurance, as well as the company's quick claims process,
have been a massive hit. Lemonade reached the 1 million customer milestone in a
fraction of the time of most of its larger peers.
As chief operating officer Shai
Wininger said, "We're seeing an overwhelming demand for a Lemonade car
insurance product from our customers." The company estimates that its
existing customer base spends about $1 billion on car insurance each year, so
this product has the potential to have an immediate and game-changing impact on
the company's revenue.
Lemonade's auto insurance product
will use the company's proprietary artificial intelligence to handle
emergencies and process claims. It also says that the product will be
"especially attractive" to drivers of electric vehicles and other
environmentally friendly cars.
Lemonade rolled out its life
insurance product in the first quarter, so we haven't seen any results yet.
Life insurance is by far the largest insurance market Lemonade has entered so
far (approximately $800 billion globally), but it's also an industry that is
ripe for innovation.
The company is building up its
product offerings fast, which will please a lot of current and potential
Lemonade now offers homeowners,
renters, pet, and life insurance, and most recently announced that it is going
into the car insurance business. Customers can bundle their insurance products
with Lemonade , meaning one-stop shopping.
Lemonade, unlike other insurance
companies, does not plan on offering its services in the U.S. alone. Lemonade
is now also available in the Netherlands, Germany, and most recently France.
Nothing is stopping Lemonade from offering its services to other countries in
Europe and around the world.
5. Value for
Lemonade's system may be similar,
but it's also faster -- approving claims in as little as one second -- and
often cheaper. It appeals to a young clientele, who are settling down with a
first home and often purchasing insurance policies for the first time. Lemonade
is targeting this group, with an average age in their early thirties, and
hoping to create lifetime value with an assortment of insurance products.
Besides opening up the company to
new markets, these products are meant to unlock greater value from each
customer as they sign on for more products, with higher premium per customer,
lowered customer acquisition costs, and long-term retention. As of the fourth
quarter, half of pet and life policy purchases were from existing customers.
Lemonade is launching new products
at a rapid rate, and it's far from finished. In fact, its biggest project seems
to be right around the corner.
6. Lemonade Is Growing Fast.....
Lemonade's revenue has soared since the platform's initial launch in
2016, but its bottom line remains deep in the red.
Lemonade is attracting more users,
selling more insurance plans, and taking smaller losses on each plan. As a
result, its gross and adjusted EBITDA margins are gradually improving, thanks
in part to its use of AI and chatbots instead of human customer service
Lemonade's total number of customers
grew from just 308,835 at the end of 2018 to just over a million at the end of
2020. Its average premium per customer rose from $145 to $213 during the same
Approximately 70% of Lemonade's customers
are under the age of 35, and roughly 90% of its customers had no plans to
switch to other carriers. That stickiness makes it a great play on the
millennial market, and its average premiums could continue climbing as its
aging customers purchase more expensive plans or Lemonade rolls out additional
Lemonade expects its revenue to rise
21%-24% in fiscal 2021, but that growth rate isn't entirely comparable to the
prior year due to a change in its reinsurance structure in the second half of
Instead, Lemonade says its gross
earned premium, or the earned portion of its GWP, is a clearer indicator of its
growth. It expects its gross earned premium to increase by 70%-73% for the full
Analysts expect strong revenue
growth for the next three to five years.
- Piper Sandler decreased their price objective on
Lemonade from $159.00 to $134.00 and set an “overweight” rating for the company
in a report on Tuesday, March 30th.
- JMP Securities lifted their price target on shares
of Lemonade from $105.00 to $130.00 and gave the company an “outperform” rating
in a research report on Tuesday, March 9th.
- Bank of America began coverage on shares of Lemonade
in a research note on Monday, March 15th. They set an “underperform” rating and
a $29.00 price objective for the company.
- Finally, Oppenheimer upgraded shares of Lemonade
from a “market perform” rating to an “outperform” rating and set a $110.00
price objective on the stock in a report on Monday, March 15th.
goes through the ups and downs of its first year as a publicly traded company,
it certainly isn't sitting still.
insurance technology company was one of the hottest IPOs of 2020, opening at
roughly $50 in its market debut that July and hitting a high of $183 this
January. But it's lost more than half its value since that time, mostly after a
disappointing fourth-quarter earnings report.
still fairly new and very much in growth mode, and in the past year it has
added pet and life insurance. To hear management tell it, the best may be yet
to come. On the fourth-quarter conference call, COO Shai Wininger said the
company is working on a new product that "may well be the most significant
launch we've ever done."