When Life Gives You Lemons, Make Lemonade!

Taking a Look at Lemonade (LMND) & Weekly Activity

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A Refreshing Splash in the Insurance World

It has been a scary move this year to bet big on small-cap growth stocks, but careful stock selection has played out well for a few choice names. Lemonade (LMND) is one of those and the market is starting to catch on, as the stock has surged more than 30% YTD. Gains picked up steam after Lemonade released Q1 results in early May. The company showed improvements to its losses, while also growing premiums faster than expected and boosting guidance for the year. So, what does Lemonade even do?

LMND operates in the insurance industry, which is currently dominated by a small number of large players. Many of which have been around for quite some time and have executed on preserving their legacies of creating shareholder value through an army of insurance brokers, astute underwriting, and investing their floats.

Due to the timing between the collection of premiums and the settlement of claims, insurance companies invest these premiums, known as “the float,” to earn income via interest, dividends, and/or appreciation. This concept is referred to as “investing the float.”

This is where LMND comes in… they are working to disrupt those legacies with its tech-centric, AI-driven insurance platform. According to CEO Daniel Schreiber, they have “built a company purely on a digital substrate with AI and behavioral economics as our foundations.”