Are you able to love a stock when other traders hate it? True contrarians should check out New York-based Lemonade (NYSE:LMND) as LMND stock is currently available at a discount price.
This is no ordinary insurance company. It can be described as an insure-tech business, as Lemonade leverages the power of artificial intelligence (AI) and behavioral economics, and aims to replace brokers with bots.
On top of that, Lemonade gives its unused premiums to nonprofits selected by its community. Clearly, the company is a real disruptor in the insurance industry.
Yet, not everyone believes in Lemonade as an investable business. It’s interesting to witness the skepticism, even as Lemonade accelerates its growth and broadens its insure-tech offerings.
A Closer Look at LMND Stock
Just to recap, Lemonade debuted on the New York Stock Exchange on July 2, 2020.
The company had originally indicated a price range of $23 to $26 for its common stock shares. However, not long afterwards, the company raised the initial public offering (IPO) share price to $29.
Amazingly, LMND stock debuted at $50.06. Just four days later, on July 6, 2020, the stock soared to $96.51.
And, it got even crazier from there as the incredible rally continued. By Jan. 11, 2021 the Lemonade share price reached an all-time high of $188.30.
The rest of 2021, so far, hasn’t been so great for the stockholders. Amid a multi-month decline, LMND stock fell below $100 in March, $75 in August and $65 in October.
Perhaps there was too much hype surrounding Lemonade, and the share price needed to come back down to earth.
So, if you’ve been sitting on the sidelines or are just learning about Lemonade today, then there’s an opportunity to pick up some shares at a greatly reduced price point.
Cars, Pets and More
Folks who haven’t kept up with Lemonade’s development might think that the company only offers renters’ and homeowners’ insurance.
Yet, Lemonade’s been making some changes. There’s money to be made in other insurance niches, and Lemonade is expanding with conviction.
The company added pet insurance in the second half of 2020, and then expanded into term life insurance in 2021’s first half.
Personally, I believe that offering pet insurance is a savvy move. A press release from Lemonade observes that 70% of U.S. households have a pet — a trend that appears to be on the rise, possibly due to the onset of the Covid-19 pandemic.
In September of this year, Lemonade even went so far as to launch a preventative care package designed specifically for puppies and kittens under two years old.
Regarding Lemonade’s venture into automotive insurance, the company should soon be firing on all cylinders.
Lemonade has “made real strides on all aspects of our car roadmap: product, technology, recruiting, and regulatory approvals,” the company assures.
Bearish, but Only Slightly
Despite Lemonade’s broadening ambitions, some folks just can’t seem to muster up much enthusiasm about the company.
Just to give you an example, not long ago, a Barclays analyst hit Lemonade with a price-target reduction, from $80 to $68.
As of mid-October, that’s still slightly higher than the current share price. So, perhaps it’s not an excessively pessimistic price-target cut.
Also, the Barclays analyst maintained an “equal weight” rating on LMND stock. Thus, there wasn’t a downgrade in that respect.
Frankly, it seems as if Wall Street’s analysts don’t know what to think of Lemonade. Believe it or not, their price targets on the stock range from $26 to $130.
Really, this is a sign that Lemonade is divisive, and not necessarily in a bad way.
The company is out to transform the insurance market as we know it – and that prospect might be scary to folks who are averse to change.
The Bottom Line
Lemonade is truly a unique company. To invest in it, you’ll need to have an open mind.
Admittedly, LMND stock is a speculative bet. Plus, the analyst community is divided on Lemonade, and can’t seem to agree on where the share price is headed.
Still, the company is pushing into potentially lucrative insure-tech niche markets.
So, feel free to take a position if you believe in Lemonade’s bold vision – and if you don’t mind seeing the status quo get disrupted.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
