Lemonade ends first day on NYSE up 140%

Daniel Schreiber and Shai Wininger  photo: Ben Kalmar

Wall Street investors have shown that they have the appetite for the risk involved in the digital insurance company.

The share price of insurtech company Lemonade (NYSE: LMND) ended its first day trading on Wall Street up 139.34% at $69.41, giving a market cap of $3.8 billion.

There had been enormous skepticism about Lemonade's much anticipated IPO. Although its revenue is growing fast, it is still low, and the company is far from turning a profit or presenting a positive cash flow. But it is now clear the investors see Lemonade as a worthwhile risk.

Only last week, Lemonade filed a prospectus to raise money at a valuation of $1.1 billion, before money. But on Wednesday it was able to successfully raise $319 million at $29 per share at a valuation of $1.3 billion, before money and $1.6 billion, after money.

This valuation is an impressive feat for a company with revenue of $82 million over the past four quarters that it has reported - in other words a multiple of 15.5 of revenue and 11.5 when cash reserves are subtracted. Even so the IPO itself was still at a far lower valuation that the company's last financing round in 2019, when it raised $300 million led by its largest investor Softbank, which was reportedly at $42 per share. However, the first day's trading has more than rectified that situation.

Prominent investors in Lemonade after the IPO include Softbank (22%), Sequoia and Aleph (8.3% each), the company's founders Daniel Schreiber (6.4%) and Shai Wininger (7.2%), General Catalyst (5.9%) and XL Innovate (4.2%).

Digital insurance company Lemonade was founded in Israel in 2015. The company sells home insurance online based on big data and artificial intelligence. The company began operating in the US and has a license to sell insurance in most US states. Lemonade also began operating in Europe last year. The company has claimed in the past that it can gather 100 times more data that traditional insurance companies, which makes it cheaper and more efficient than its traditional rivals and gives it the ability to offer more precise pricing.

Published by Globes, Israel business news - en.globes.co.il - on July 3, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Daniel Schreiber and Shai Wininger  photo: Ben Kalmar
Daniel Schreiber and Shai Wininger photo: Ben Kalmar
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