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Why Is Lemonade Stock Down? Is It Time to Buy?

By Neil Rozenbaum - May 12, 2021 at 11:15AM

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Lemonade earnings were actually good.

In this video, I will go over Lemonade's (LMND -11.22%) Q1 earnings report and talk about why this was actually a promising report, seeing as it raised guidance even after the whole Texas freeze event. 

Earnings highlights

As reported, IFP growth accelerated to 89% YoY with IFP of $252 million, and about 1.1 million customers. Premium per customer increased 25% YoY to $229. Gross Earned Premium increased 84% YoY to $56 million. 

Car and life

Investors will have to wait until we get to see the effects of Term Life and Car Insurance. Life is still in its early days and Lemonade is still testing and iterating on the product experience to ensure it is both fantastic and delightful. As for the much anticipated Car Insurance, the company has not yet announced a launch date, and guidance currently contemplates no material contribution from car insurance.

High loss ratio (Texas freeze)

Loss ratio increased 68% to 121% because of the Texas freeze. "We received about a year's worth of claims in its first few days, providing an extreme stress test for both our operations and financial model." Yet EBITDA guidance for the year remains substantially in line with analyst consensus prior to the storm.

For the full insights please watch the video below. 

*Stock prices used were the closing prices of May 11, 2021. The video was published on May 12, 2021.

Neil Rozenbaum owns shares of Lemonade, Inc. The Motley Fool owns shares of and recommends Lemonade, Inc. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Lemonade, Inc. Stock Quote
Lemonade, Inc.
LMND
$25.23 (-11.22%) $-3.19

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