Shares of Lemonade (LMND 12.46%) fell 26% in March 2021, according to data from S&P Global Market Intelligence. The insurance technology expert posted Street-stumping results early in the month, but the surprise wasn't enough to sustain Lemonade's soaring stock price.
Lemonade's fourth-quarter revenue landed at $20.5 million, comfortably ahead of Wall Street's $19.1 million consensus estimate. Adjusted net losses of $0.60 per share also beat the Street's expectations of a $0.65 loss. The customer list grew 56% at 1 million names, and the average insurance premium per customer increased by 20%. However, management's guidance for the next quarter pointed to sales just below analysts' then-current projections. Lemonade's shares fell 13% over the next two days as investors digested the report and the concomitant analyst reactions.
The road ahead may be bumpy and unpredictable, but Lemonade has a very real chance to disrupt the enormous insurance market. The company's reliance on data-driven sign-up and insurance-claim procedures gives it lower operating costs, which are passed on to customers in the form of lower premiums. I'm so impressed by Lemonade's business prospects that I bought a few shares in December and I'm sorely tempted to add to my position at these low prices. Market-beating results over the long term are far more important than lumpy revenue streams in the early going.