What happened
The stock market was mostly flat halfway through the trading session on Tuesday, but insurance disruptor Lemonade (LMND +4.62%) was a big standout. As of 12:50 a.m. EST, Lemonade's share price had climbed by more than 11% for the day.
So what
There doesn't seem to be any specific news driving today's move in Lemonade, which isn't entirely unusual for the stock. Double-digit moves in either direction are frequent events for the insurance technology company. And although it's earnings season, Lemonade doesn't report its results until March 1.
Image source: Getty Images.
However, Lemonade has been somewhat beaten down recently. Before today's move, Lemonade had dropped by 23% since its all-time high reached about a month ago, despite the overall stock market continuing to move higher during that time. So, we could be seeing buyers getting interested at these levels. Plus, other insurance stocks are rallying as well, including fellow tech-focused insurer Root (ROOT +2.10%), which is up by more than 3% today.
It's also worth pointing out that despite being left out of the recent short-squeeze phenomenon, Lemonade is a heavily shorted stock. As of Jan. 15, more than 22% of Lemonade's float (the available shares to trade) were sold short, so it's entirely possible short covering might have something to do with the move higher.
Now what
With stocks like Lemonade that have extremely high growth rates, massive addressable markets, and high valuations, it's important for investors to not only expect volatile price swings like we're seeing today, but to understand that there's not always going to be a clear, underlying cause.
