Retail Activist Investors Could Turn Lemonade Sour for Bears

Headquartered in New York, Lemonade (NYSE:LMND) is a global company that’s quickly establishing itself as a premier provider of “insure-tech.” So far, long-term investors have enjoyed strong gains in LMND stock since its highly successful initial public offering (IPO) in early July.

LMND stock logo displayed on smartphone laying on top of computer keyboard.
Source: Stephanie L Sanchez /

Lemonade hasn’t been coy about its intentions to fully disrupt the insurance market. It seems as if Lemonade is on the war path to overturn the boring, boomer-dominated, tech-backwards conventional insurance market.

In other words, Lemonade is the poster child of millennial/Gen Z business models. Because of that, LMND stock should have strong appeal to bold, young traders.

This leads us to a certain group of trading rebels who’ve garnered a whole lot of attention lately – and who might, in the near future, take a shine to LMND stock.

A Closer Look at LMND Stock

For most retail investors seeking to grab shares of LMND stock at a ground-floor bargain price, the battle was over before it even began.

Lemonade had originally indicated a price range of $23 to $26 for LMND stock. Not long afterwards, though, the company raised the initial public offering (IPO) share price to $29.

LMND stock debuted on the New York Stock Exchange on July 2 at $50.06. Startlingly, the share price jumped by 132% on LMND’s first day of trading.

Just four days later, on July 6, the buyers pumped the stock all the way up to $96.51. With that, all hopes of getting a rock-bottom price with LMND stock were dashed.

A lengthy period of uninspiring price action followed. A new bull cycle commenced in November, however. By Jan. 11, LMND stock had attained a nose-bleed all-time high of $188.30.

Thankfully, as of Feb. 5, LMND stock had cooled off and settled at $144.82. Hence, it’s possible to take a position in LMND below the peak price – and prior to an impending run-up, if it happens.

The Next GameStop?

On a little corner of the Internet, a surprisingly powerful group of message board participants have changed the face of the financial markets.

I’m referring to the now-famous message board platform Reddit, where there’s a subreddit called r/WallStreetBets which launched certain stocks into the stratosphere.

These stocks include GameStop (NYSE:GME), AMC Entertainment (NYSE:AMC), Bed Bath & Beyond (NASDAQ:BBBY) and Koss (NASDAQ:KOSS).

Lately, market commentators like to speculate about which stock will be r/WallStreetBets’ next short squeeze target.

I must admit, I’m giving in to the temptation and proposing that LMND stock could be a perfect candidate for the Reddit crowd.

The “Redditors” are young and love to disrupt old, stodgy financial structures. Their vision and Lemonade’s mission are a match made in heaven.

Lemonade might not be on board with a Reddit-induced run-up. But then, the folks at r/WallStreetBets never seemed particularly concerned about getting blessings or permission.

Sticking It to Citron, Again

What they are concerned about, I would suppose, is meting out justice in a financial market which has favored institutional investors for generations.

The r/WallStreetBets users certainly seem to have beaten short seller Citron Research at its own game when they reportedly squeezed Citron out of its short position in GameStop stock.

It was a veritable David-versus-Goliath story which the media made both famous and infamous. Heck, the Reddit group even got an acknowledgment from Tesla (NASDAQ:TSLA) CEO Elon Musk, who tweeted “Gamestonk!!” while including a link to r/WallStreetBets.

So, here’s another wrinkle in the story. Not too long ago, Citron issued a prediction that LMND stock will fall to $100. With that, Citron vowed to rip Lemonade a “new one.”

It’s not difficult to imagine that the Reddit traders would be more than happy to put Citron in its place. Pumping LMND stock would be a perfect way for them to teach Citron a lesson in humility – while, yet again, reaffirming r/WallStreetBets’ power to move the markets.

The Bottom Line

It’s a risky bet to buy LMND stock because Reddit users might pump up the share price.

Still, it’s a plausible idea that this could happen soon. Either way, if you’re into tech-forward companies with a rebellious streak, LMND stock is worth considering.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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