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Why Lemonade Stock Jumped 13% Today

By Anders Bylund - Dec 23, 2020 at 4:53PM

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Sometimes, it doesn't take much news to launch a big move.

What happened

Shares of Lemonade ( LMND -8.90% ) closed Wednesday's trading 12.9% higher, despite a complete lack of news from the company or earthshaking developments in the homeowner insurance market.

So what

Lemonade's stock continued a long-running pattern of rising prices and impressive share volumes, without any sudden spikes that might indicate a large investment from a single buyer. This is market momentum at its finest, driving the innovative insurer's stock prices to another all-time high.

A yellow arrow smashes through a brick wall on its way upward.

Image source: Getty Images.

Now what

Lemonade's stock has now gained 93.8% since its initial public offering (IPO) in July. That return is based on its closing price on the first day. The stock has more than quadrupled from the IPO's actual pricing of $29 per share.

Consumers are embracing Lemonade's artificial intelligence-based insurance sign-up and claim management tools, where you never have to deal with a human insurance agent. The company also passes on the cost savings of this all-digital business model to its customers in the form of lower insurance premiums.

Likewise, investors are applauding the fantastic business results that flow from Lemonade's disruptive idea. Sometimes, that's all the rocket fuel you need in order to deliver another big jump on a day with no significant news.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Lemonade, Inc. Stock Quote
Lemonade, Inc.
$45.05 (-8.90%) $-4.40

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