Insurance technology company Lemonade (LMND 0.79%) exploded after its initial public offering in July 2020. The stock has stumbled significantly since, but does that performance mean the investment thesis has changed?
In this video from "The 5" on Motley Fool Live, recorded on Sept. 23, Fool.com contributor Brian Withers discusses why this stock has been on such a wild ride, and whether or not he thinks it's still worth holding onto.
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Brian Withers: I'm going to talk a little bit about kind of a popular one among Fools is Lemonade. [laughs] It certainly went up and was beating the market for a while and then it kind of crashed down. A lot of that has to do with, I think it's just an early stage company and they still have a lot to prove and I think some of the run-up in the stock was more of kind of what Brian Feroldi likes to call price-to-hope ratio where there's a lot of potential here and Lemonade could absolutely capture a huge market and be at 10-bagger over the long term, but sometimes, investors have shorter windows than it actually takes companies to go in and make accomplishments and get into new markets over time. I think the stock has sold off a good bit. I want to say 40% off its high maybe, but to me, the same reason I invested in it six, eight months ago soon after it went public, it still seems to be all the same thesis and all the right things are happening. It's just it's going to take a while for it really to flow through to kind of top-line growth, as well as once they get into Lemonade auto which I think is a huge opportunity for it, that isn't even yet approved.
Lots of growth levers here, the stock is down but totally not out, and so that's the one that I'm sticking with even though the market has kind of sold it off.