Israeli digital insurance company Lemonade (NYSE: LMND) saw its share price fall 16.4% on Thursday and Friday, giving a market cap of $8.4 billion, after coming under fire from activist short-seller Citron Research. The share price is now $148, 10% below the price of $165 set for the company's secondary offering but still 40% the price of $29 per share when it held its IPO in June 2019.
As part of Lemonade's secondary offering, the company issued 3.3 million shares and raised $545 million ($526 million net). The sum could swell by a further $119 million gross, if the underwriters exercise their options within the next 30 days.
In addition, as part of the secondary offering, shareholders sold 1.5 million shares for $252 million. Among the shareholders who sold was founder and CEO Daniel Schreiber who sold shares for $49.5 million and was left with shares worth $400 million.
Shortly after the second offering activist short seller Andrew Left of Citron Research tweeted, "Citron knows it’s a difficult year for short-sellers but Lemonade is something special …… it's going back down to $100."
Citron then posted a clip to explain why the US Securities and Exchange Commission (SEC) should investigate Lemonade. Left said that the share is expensive, with a much higher multiple than Tesla or Zoom, and it is anyway an insurance company and not a tech company. The clip makes a bad mistake in claiming that cofounder Shai Wininger sold shares in the secondary offering when he did not, and finally gives a target price of $85.
Published by Globes, Israel business news - en.globes.co.il - on January 17, 2021
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