Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Lemonade Is Rising (Again) on Wednesday

By Matthew Frankel, CFP® - Dec 30, 2020 at 2:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The insurance disruptor is rising by double digits for the second day in a row.

What happened

The stock market was having a modestly strong day on Wednesday, with all three major averages up by 0.4% or less at 2 p.m. EST. However, insurance technology company Lemonade (LMND 5.29%) was a big outperformer. Shares had risen by 11%, and this came on the heels of a double-digit rise just a day earlier.

So what

There isn't any company-specific news on Wednesday, nor are there any analyst upgrades driving Lemonade's price higher.

Instead, this seems to be a continuation of the momentum that followed Lemonade's lockup expiration on Tuesday. The high-momentum insurance disruptor's stock fell sharply on Monday in anticipation of the lockup expiration, and for good reason -- 44 million shares, or roughly two-thirds of all Lemonade stock -- became available to trade by insiders and early investors for the first time beginning on Tuesday.

Glass of lemonade.

Image source: Getty Images.

Well, this turned out to be a non-event. Based on yesterday's price action and the stock's volume (about 8 million shares between today and Tuesday), it doesn't seem like many insiders are in a big rush to cash out.

Now what

Now that the lockup fears have subsided, investors can once again focus on Lemonade's business. And there's no denying the growth momentum. The company's in-force premiums nearly doubled year-over-year in the third quarter and customer count grew by 67%. Most experts agree that Lemonade is the most promising insurance disruptor. Since the company has just started to scratch the surface of the $5 trillion global insurance industry, it's not a surprise that investors seem to be excited about buying the stock.

Matthew Frankel, CFP owns shares of Lemonade, Inc. The Motley Fool owns shares of and recommends Lemonade, Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lemonade, Inc. Stock Quote
Lemonade, Inc.
LMND
$32.02 (5.29%) $1.61

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.