Lemonade Shares Off After Better-Than-Expected Results

Lemonade shares fell as the online insurance platform’s third-quarter revenue declined but topped analysts’ expectations.
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Lemonade  (LMND)  shares fell on Wednesday as the online insurance platform’s third-quarter revenue declined but topped analysts’ expectations.

Lemonade recently traded at $61.81, down 6.2%. But the stock has more than doubled from its July IPO price of $29 amid the technology-stock rally.

Lemonade posted a net loss of $30.9 million, or 57 cents a share, shrinking from a loss of $31.2 million, or $2.78, in the year-earlier quarter. The FactSet analyst consensus called for a 63-cent loss in the latest quarter.

Revenue dipped 6% to $17.8 million in the third quarter from $19 million in the year-earlier period. The FactSet analyst consensus called for revenue of $14.7 million in the latest quarter.

The New York company also forecast sales of $18 million to $19 million for the fourth quarter, and $91 million to $93 million for the full year. 

That beat analysts’ estimate of $16.8 million for the fourth quarter and $87.5 million for the year.

Last month, Credit Suisse analyst Michael Zaremski began coverage of Lemonade with an underperform rating and a $56 price target.

The company’s “valuation is too juiced,” given a Credit Suisse customer survey that showed weakness, he said.

The survey showed that satisfaction rates in important areas, such as the claims and application processes, were “materially lower” for Lemonade than the peer average, Zaremski wrote in a commentary cited by Bloomberg.

Lemonade needs “expense ratio improvement,” he said. And it must lower its acquisition cost ratio and raise its customer retention rates, particularly among young people, to attain lasting profitability, he said.