Lemonade Stock Juices Returns for Investors

Insurtech insurance stocks

Author: Tim Phillips

Date: June 22, 2024

Share this

Popular insurtech firm Lemonade Inc (NYSE: LMND) saw its shares pop 9.6% on Monday as the SoftBank-backed company continues to benefit from the innovation it’s delivering in the insurance space.

One of the more prominent success stories for SoftBank CEO Masayoshi Son’s Vision Fund, Lemonade listed on the New York Stock Exchange at the beginning of July and promptly saw its shares surge 138% on the first day of trading.

In the Property & Casualty (P&C) insurance space, Lemonade’s unique business model means it keeps a flat premium fee of 25% up front. The remaining 75% of premiums is left available for claims, with any excess funds paid to charity.

What’s more, the company also uses artificial intelligence (AI) to streamline its business processes, with its customer acquisition costs purported to be significantly lower than its competitors.

With a market cap of only US$3.7 billion, investors can expect this stock to be a volatile holding (it’s still down around 30% from its recent high). 

However, if Lemonade can continue to take market share from traditional insurance options in the home renters/homeowners space, then returns could be even sweeter over the long term.

This material is categorised as non-independent for the purposes of CGS-CIMB Securities (Singapore) Pte. Ltd. and its affiliates (collectively “CGS-CIMB”) and therefore does not provide an impartial or objective assessment of the subject matter and does not constitute independent research. Consequently, this material has not been prepared in accordance with legal requirements designed to promote the independence of research. Therefore, this material is considered a marketing communication.

This material is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CGS-CIMB’s clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this material. The information and opinions in this material are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, derivative contracts, related investments or other financial instruments or any derivative instrument, or any rights pertaining thereto. CGS-CIMB have not, and will not accept any obligation to check or ensure the adequacy, accuracy, completeness, reliability or fairness of any information and opinion contained in this material. CGS-CIMB shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.

About the Author: Tim Phillips