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Lemonade Announces Second Public Offering; Shares Pop 14%

Lemonade, Inc introduced after the bell on Monday that it could offer an extra 3 million widespread shares to the general public, simply six months after its preliminary itemizing on the New York Inventory Trade.

Round 1.5 million shares will even be supplied on the market by present shareholders, and underwriters will likely be granted 30-day choices to buy as much as 678,647 extra shares.

Lemonade (LMND) will use the proceeds from the Major Providing for normal company functions however proceeds from the Secondary Providing by present shareholders will likely be saved by the sellers.

Lemonade is an American insurance coverage firm that gives and handles insurance coverage insurance policies utilizing synthetic intelligence purposes referred to as “chatbots”. The corporate just lately introduced that it had ended 2020 with a couple of million lively customers.

Lemonade first went public in July 2020 with an inventory worth of $29 a share. It ended Monday’s session 14% stronger at a document excessive worth of $183.26. LMND shares are up nearly 50% thus far this 12 months.

Lemonade’s enterprise mannequin is completely different from conventional insurers in that it has changed brokers and forms with bots and machine studying. The corporate retains a flat 25% price of a buyer’s premiums and units apart the remaining 75% to pay claims and buy reinsurance. Then, annually, the corporate donates unclaimed premiums to non-profit charities of its customers’ selection. (See LMND stock analysis on TipRanks)

Morgan Stanley analyst Michael Phillips reiterated his Maintain score on LMND a month in the past and set his worth goal at $70. This suggests draw back potential of round 62% from present ranges.

Phillips’ score comes on the heels of a collection of investor calls with Lemonade’s CFO, Tim Bixby, that targeted on the drivers behind the corporate’s improved outcomes and sustainability into the longer term. Phillips famous that Lemonade has seen accelerating progress in its premium per-customer and attributes this progress to clients insuring extra property as a result of accumulation of extra wealth, relatively than pricing of premiums alone.

Consensus amongst analysts is a Maintain based mostly on 1 Purchase, 3 Holds and 1 Promote. The typical price target of $72.25 suggests draw back potential of round 61% over the following 12 months.

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