That, in conjunction with a much larger lockup release on 12/29 lead us to conclude that the stock will implode in short order. Presently, the foundation consists of employees that work for Lemonade the public trading vehicle. It is trying to present itself as a friendly insurer that will not deny claims when in reality much larger and conservative reinsurance organizations are the ones that will call the shots and can quickly destroy Lemonade’s business with the stroke of a pen. Lemonade IPO: 13 Things for Investors to Know About LMND Stock The company is offering 11 million shares in its IPO By William White , InvestorPlace Writer Jul 2, 2020, 2:31 pm EST July 2, 2020 Again, no insurance experience. We of course doubt the NYSE’s flattering description of Lemonade had anything to do with courting its backers Softbank and Sequoia for their remaining stream of IPO listing business. We should note that as short sellers we think ESG investing has a lot of merit. Insurance company Lemonade's post-IPO lockup of insider stock selling is set to expire Tuesday. We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. The stock rose modestly by 2020 IPO standards since then. With only ~940k customers, Lemonade is a beyond subscale insurer. When you cut through the hype, Lemonade is basically a “lead gen” service, losing astronomical sums of money to find new customers and then selling that customer flow to reinsurers. The legions of new retail traders that minted money in Lemonade call options this year owe significant amounts of short term capital gains taxes in a few months. Find out why Lemonade, Inc. is one of the 10 best stocks to buy now You just cannot make a go of it selling pet and renters, there is not enough premium or profit to get your investor money back let alone make profits, pay dividends, grow, prosper, etc. If you run the math, Lemonade donates slightly over $1 per customer per year to charity! Lemonade on the other hand a plain vanilla insurance company with no secret sauce that lives and dies based on reinsurance contracts. So we are not writing this piece to take shots at ESG investing broadly. Lemonade is run by a former executive from Powermat – a wireless charging pad company. The best-performing listing of 2020 is poised to enter the new year with extra volatility after insider selling restrictions expire this week. Yet for the “low low cost” of $1 per customer per year, Lemonade got itself a nice multi-billion dollar ESG premium valuation. Of that, 24% are sold short, according to financial analytics firm S3 Partners. Any other insurer could replicate its piddly charity contributions without denting their margins. There is no big addressable market story. That compares to 15.8 million shares available to trade as of Nov. 12, according to data compiled by Bloomberg. After opening for trading at $11.50 a share on Oct. 19, Paya closed at $12.15 on its first day. Investors have been snapping up tech IPOs in 2020, and Lemonade is a prime example of what they like. Insurance provider and technology company Lemonade ... Strong investor demand drove shares up 139% on its first day of trading back in July 2020. Shares rocketed in their first day of trading and closed up 140%. Lemonade does not even have to disclose the donors to this entity per the rules around these shadowy financing vehicles that are often the underlying entity behind political action committees or PACs. While Lemonade insiders have been quick to dump stock at prices less than half of where the stock currently rests, the company has not been so quick to set up a website for its supposed “Lemonade Foundation”. Lemonade tried to IPO in 2019 and failed – after this IPO failure, in February 2020 the company created and allotted 500,000 shares to a 501(c)(4) entity called “Lemonade Foundation”. Donate your profits to a real charity effort instead of enriching greedy insiders. Lemonade sold 11 million shares at $29 a piece, bringing in just over $300 million and giving new investors the $444 million difference, based on … Get the insurance industry's trusted newsletter. The problem with this model is two-fold. The only thing proprietary about its business model is that it was backed by Softbank and therefore afforded the opportunity to burn wild amounts of cash at will. That number is imprecise, but directionally useful. For comparison, Allstate – a real insurance company that also does charity – in fact, far more charity than Lemonade – trades at about ~1x gross earned premiums (a proxy for revenue in an insurer). It is customary for insiders to wait 6 months to sell shares after an IPO. Insiders utilized an extremely shady lockup agreement so that they could start dumping shares immediately after the IPO. The NYSE has even claimed that Lemonade is “connecting profit with purpose”. I, like many other IJ readers, have expressed my doubts about Lemonade and, really, all other InsurTechs. In our view, Lemonade is a despicable company that is taking advantage of people’s desire to do the right thing. We believe this move was purely to amp up its appeal to ESG focused investors. That is what makes Lemonade such an important story. We certainly would prefer a world where companies that bribe corrupt foreign governments, employ slave labor, require their employees to utilize Gatorade bottles for bathroom breaks, and dump toxic waste in the waters of Lake Michigan are held accountable. That alone is not the reason the company will implode. And money managers who believe in ESG and who have any desire to appear credible should be speaking out about companies such as Lemonade that are so obviously and blatantly abusing the ESG framework purely for self-enrichment purposes. But 2020 is alive with … Part of the issue is that the lines that define a strong “ESG investment” remain unclear. After becoming one of the year’s hottest IPO’s, the stock took a breather for several months before resuming its upward trajectory. The company’s shares have soared on the promise of its digital platform in carving out a niche for renters and homeowners, according to Bloomberg Intelligence research. It is even more telling that one of the “Founding Fathers” of ESG investing – who the New York Times referred to as a “Buddhist Monk” – was arrested for bribing his child’s way into college. Perhaps most importantly, Lemonade is a disgrace to ESG/social impact investing and money managers who want ESG to be viewed with a non-critical lens should strongly consider speaking out against this company. Thank you! Even Trupanion, an extremely high flying pet insurer, trades at only 10x revenues despite exhibiting similar growth to Lemonade. While Lemonade does not appear to be particularly good at charity, it does appear to be extremely adept at setting up a stock dumping vehicle. 40 % ” of its unclaimed premiums to charity within the next few years s own actions of! You not at least in principle – are undertaking business Operations that may theoretically improve the world many. 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