Lemonade plunges after sour forecast by short-seller Citron

Daniel Schreiber and Shai Wininger  photo: Ben Kalmar

The Israeli digital insurance company completed a secondary offering last week.

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

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Daniel Schreiber and Shai Wininger  photo: Ben Kalmar
Daniel Schreiber and Shai Wininger photo: Ben Kalmar
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018