Lemonade touches a 52-week low, what's next for LMND stock?

Follow us on Google News:
 Lemonade touches a 52-week low, what's next for LMND stock?
Image source: © Komkrittor | Megapixl.com
Highlights:
  • Lemonade's gross loss ratio was 96%, up from 73% in the year-ago quarter.
  • Its revenue surged 100% YoY in Q4, FY21.
  • The company's In Force Premium (IFP) rose 78% YoY in the final quarter of fiscal 2021.

Lemonade, Inc. (LMND) stocks were down over 22% in pre-market trading on February 24. The decline came a day after it reported its fourth-quarter fiscal 2021 earnings results.

During the extended trading hours on Wednesday, February 23, the stocks of the insurance company were down over 16 per cent to US$19.26 per share.

Notably, the Lemonade stock closed at its 52 week low of US$22.95.

Also Read: Travelport IPO: Is the travel-booking firm going public this year?

Why have the stocks tumbled?

The investors seemed concerned by the fourth-quarter earnings results of the New York-based insurance company, as its gross loss ratio was 96%, up from 77% in the previous quarter and 73% in the year-ago quarter.

Meanwhile, the company's revenue increased by 100% YoY to US$41 million in Q4, FY21. Its net loss came in at US$70.3 million, or US$1.14 per share, against a loss of US$33.9 million, or US$0.60 per share in the comparable quarter of the previous year.

The company said that the increase in the loss ratio is mainly due to expanding its home and pet insurance business, which "demonstrate higher loss ratios" than their other stable operations.

Also Read: Forget Pi Network, here are the top 3 apps to mine crypto

Lemonade (LMND) fourth-quarter fiscal 2021 earnings result

What's next for Lemonade?

The company said that it is working on new projects to improve profitability in the newer segments of the business. In addition to that, it also said that it expects its loss ratio to be under 75% in the future.

However, it also said that its loss ratio might remain higher than the expected range in the near term as its new business lines will need more time and cost to be matured.

The company's shares bumped up after it went public in July 2020. But the rally did not last long as both the losses and loss ratio have raised investors' concerns. Furthermore, the investors were disappointed by the acquisition of MetroMile, which fuelled more losses and an elevated loss ratio.

Also Read: Will Argo AI IPO happen in 2022?

However, the company lauded the acquisition as it launched its Lemonade Car auto insurance last year, and the MetroMile deal aided it to enter various markets faster. Now, the company is expecting to turn a profit quickly through it.

Bottom line

The experts are still optimistic about the LMND stock due to various reasons. First, Lemonade's In Force Premium (IFP), a measure for the aggregate annualized premium for customers, rose 78% YoY to US$380 million in Q4, FY21, while its customer count increased by 43% YoY to more than 1.42 million.

In addition to that, its increased premium per policy, which rose 25% YoY to US$266 million, suggested that more users are taking out the company's policy even at the higher rates.

Also Read: Can geopolitical tensions prove to be a boon for Exxon (XOM) stock?

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.