fell after the insurtech reported that its losses had narrowed in the third quarter. The company also announced that it would begin to offer term life insurance.
The stock was down 5.6%, to $62.21, in midday trading on Wednesday.
The decline in the shares comes as the company’s lockup expires. Large shareholders of Lemonade (ticker: LMND) had been restricted from selling their shares for 180 days after its initial public offering in July. IPO. Lemonade investors include
Sequoia Capital, and General Catalyst. The early release is limited to 33% of holdings, a Lemonade spokeswoman said. Starting on Thursday, insiders can sell their stock while non-insiders can exit beginning on Friday, she said.
One of the first pure carrier insurtechs to go public, Lemonade’s stock more than doubled on its debut, and the shares have remained well above its $29 IPO price.
Late Tuesday, Lemonade reported a loss of $30.9 million, or 57 cents a share, in the quarter ended Sept. 30, compared with a loss of $31.1 million, or $2.78 a share, in the quarter a year ago. Revenue dropped to $17.8 million, from $19 million a year earlier. Total customer count jumped by 67%, to 941,313, for the quarter, the company said.
The results exceeded analysts’ forecasts. They had expected the company to report losses of 64 cents a share on $14.7 million in revenue. Lemonade, in a shareholder letter announcing its results, said it forecast revenue of $18 million to $19 million for the fourth quarter and $91 million to $93 million in revenue for the full year.
Matthew J. Carletti, an analyst at JMP Securities, said Lemonade’s results were impressive. He reiterated a Market Outperform rating for Lemonade’s shares and a $105 price target.
“Importantly, we are encouraged by what we saw in the quarter regarding what we view as the key ‘leap of faith’ investors in Lemonade must make—that renters acquired today will stay with Lemonade as they progress through life and their insurance needs grow,” Carletti said in a note.
Started in 2016, Lemonade provides insurance for renters and homeowners in the U.S. for stolen or damaged property as well as personal liability. The start-up uses machine learning to better evaluate risk and AI for claims processing.
In the third quarter, the New York company began offering pet health insurance. Lemonade says it expects the pet segment to account for roughly 5% of the company’s book of business by year-end.
Now, Lemonade is expanding into the life insurance market, with plans to test a life insurance product sometime in the next 90 days.
Of the move into life insurance, “it’s an exciting thing for us to be able to start to use everything that we built for renters and homeowners and just lay on top of it new products,” Lemonade CEO Daniel Schreiber said on the earnings conference call, according to preliminary transcript. “So it is a bet, but it is a modest bet with tremendous upside.”
Lemonade also plans to expand into France in fourth quarter. The company currently offers contents and liability insurance in Germany and the Netherlands.
Write to Luisa Beltran at [email protected]