Why Lemonade Stock Soured in August
Shares of insurance company Lemonade (NYSE: LMND) fell 40.8% in August, according to data from S&P Global Market Intelligence. The company relies on machine learning and other types of artificial intelligence (AI) to manage its insurance operations, from sign-up and plan premiums to risk assessment and claim payouts.
Last month's second-quarter earnings report delivered a mixed bag of strong and disappointing results as Lemonade's AI systems misjudged some expensive risks, and investors were quick to focus on the bearish trends.
Most of the headline figures looked good in the second quarter. Revenue more than doubled year over year as the in-force premiums (active insurance-policy fees) rose by 50%. The quarterly premium per customer increased from $290 to $360, and the annual dollar retention rate increased from 83% to 87%. In other words, the average Lemonade customers paid 24% more for their insurance plans -- and told their friends to sign up.
Source Fool.com
