The stock market was having a generally strong day on Wednesday, with all three major averages in positive territory by about 0.7% as of 2:45 p.m. EDT. However, insurance disruptor Lemonade (LMND 2.57%) was a big outperformer, with shares up by 8% after rising as much as 10% earlier in the session.
There's no company-specific news fueling today's move. Instead, there is a broad-based rally in some of the rather speculative growth stocks that have been beaten down recently. In addition to Lemonade, many of the so-called "reopening stocks" and SPACs that have lost steam in recent weeks are rallying.
Lemonade was one of the highest-momentum stocks heading into 2021 and has lost about half of its value since its January peak, and was down by about 20% over the past month alone prior to today's move. Many other momentum stocks have been on similar slumps, and we're seeing many of them rally sharply today.
It's worth noting that Lemonade announced just yesterday that it is expanding into auto insurance, a move that opens up a $300 billion market opportunity (including roughly $1 billion of potential spending from Lemonade's current customers). Now that investors have had a day to digest the news, it could be adding to the optimism surrounding the fast-growing insurance stock's future potential.
It's worth noting that even after today's move, Lemonade stock is roughly flat for the week. It just seems like investors aren't quite as scared of the more speculative growth stocks as they appeared to be.