Even Though It's Down 80%, I'm Not Selling Lemonade
Lemonade (NYSE: LMND) stock has gone and done what I thought was impossible -- sliding below $30 per share and losing 80% of its value over the past year. Many investors are scrambling from this growth stock that hasn't been doing much growing but a lot of tanking.
I get the fear. But I also think it's unreasonable. I also wouldn't want to lose my principal when Lemonade has so much potential. Here's why I still have confidence in Lemonade stock.
Shares of the online insurer took off when it went public in the summer of 2020. But the enthusiasm quickly evaporated as losses piled up and the loss ratio crept higher. Both of these issues continue to plague the company. In the third quarter, the net loss widened from $31 million in the 2020 period to $66 million in 2021. The loss ratio, or roughly the difference between premiums collected and claims paid, increased five points year over year to 77%. Even more, investors were disappointed in Lemonade's acquisition of auto insurance company MetroMile, which brought more losses and higher loss ratios.
Source Fool.com
