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Here's Why Lemonade Stock Is Falling Today

By Matthew Frankel, CFP® – Oct 19, 2021 at 1:00PM

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The insurance tech company can't seem to get out of its slump.

What happened

The stock market was having a fairly strong day on Tuesday with all three major averages in positive territory. But insurance disruptor Lemonade (LMND 0.99%) was a big underperformer, with shares down by 3.5% at 12:30 p.m. EDT today.

So what

Although earnings season just got underway, that isn't the reason for today's move. Instead, the main force driving Lemonade's stock lower is an analyst's note. Specifically, an analyst from Barclays (BCS -0.32%) lowered the price target on Lemonade from $80 to $68.

Glass of lemonade splashing.

Image source: Getty Images.

There are a few things investors should keep in mind:

  • First and foremost, analyst opinions don't have any impact on the underlying business.
  • Second, the analyst's actual rating remained at equal weight, so this wasn't technically a downgrade.
  • Third, analysts don't seem to have any consistency when rating Lemonade's business. Current price targets on the stock range from $26 to $130.
  • Finally, the new $68 price target stated today is above where Lemonade is trading right now. So, it's not as if this analyst sees a ton of downside.

Now what

To reiterate, today's move doesn't have anything to do with Lemonade's actual insurance business -- just an analyst's perception of it. So take this action with a big grain of salt, and maybe even look at it as a buying opportunity if your level of conviction in the stock hasn't changed.

Looking ahead, we'll get some actual business results from Lemonade in a couple of weeks, so be sure to watch the company's growth and profitability metrics, both of which should have more of an impact on your investment thesis than analyst ratings.

Matthew Frankel, CFP® owns shares of Lemonade, Inc. The Motley Fool owns shares of and recommends Lemonade, Inc. The Motley Fool recommends Barclays. The Motley Fool has a disclosure policy.

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