The stock market continued to be under pressure on Tuesday, and that's especially true when it comes to tech-focused and high-growth stocks, with the tech-heavy Nasdaq the worst performer of the three major indices by far.
Insurance technology company Lemonade (LMND 2.58%) is a particularly poor performer. As of 1:30 p.m. ET, Lemonade shares were down by 6% to a new 52-week low and are now nearly 75% below their 2021 high.
There isn't any company-specific news fueling today's move. Rather, this seems to be a continuation of the downward momentum that started around the time of Lemonade's third-quarter earnings report a couple of weeks ago. While the company's growth looks strong, loss ratios left something to be desired, and there's still a lot of execution risk surrounding the just-launched auto insurance side of the business.
Following the earnings release, the insurance stock received a number of analyst downgrades, which helped keep its stock slumping. Plus, Lemonade announced its acquisition of fellow insurance tech company Metromile (MILE), and investors clearly aren't convinced it's a good fit.
One silver lining is that at the new lower share price, Lemonade's acquisition of Metromile looks far more attractive. If you aren't familiar with the deal, Lemonade is buying Metromile in an all-stock deal, and based on the current price, it works out to a $324 million acquisition price. However, Metromile has well over $250 million in cash that will transfer to Lemonade's balance sheet, so it is effectively paying much less for the business than the original deal price was based on.