Why Lemonade Stock Popped on Tuesday
Shares of insurance technology company Lemonade (NYSE: LMND) popped higher on Tuesday after the company reported financial results for the second quarter of 2022. In short, management says there's enough gas in the tank to get where it's going, and investors liked the sound of that. As of 12:30 p.m. ET, Lemonade stock was up 13%.
Lemonade management hammered home a gas-car metaphor in its letter to shareholders. It has spent aggressively in recent years to grow its insurance business and disrupt the incumbents. And grown it has. Lemonade's in-force premium in Q2 was up 54% year over year to $458 million. Its customer base was up 31%, nearly hitting 1.6 million. And its revenue of $50 million was up 77% from last year.
Lemonade has spent money to grow its business because, as management's metaphor explained, "gas" (capital) was cheap. But now that it's getting more expensive to raise capital, management is going to cut back spending. With these cutbacks, the company is "only" expected to lose $240 million to $245 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- an improvement of $20 million to $40 million from previous guidance.
Source Fool.com
