What Does Lemonade’s New Risk Factor Tell Investors?

Lemonade (LMND) provides insurance services to customers in the U.S. and Europe. The company is expanding its offerings with a plan to launch a car insurance product in the future.

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Let’s take a look at Lemonade’s latest financial performance, corporate updates, and risk factors. (See Lemonade stock charts on TipRanks)

Lemonade’s Q2 Financial Results

The company reported second-quarter revenue of $28.2 million. Although the revenue declined from $29.9 million in the same quarter last year, it exceeded the consensus estimate of $26.8 million.

Lemonade posted a loss per share of $0.90. Though the loss narrowed from the loss per share of $1.77 in the same quarter last year, it widened compared to the consensus estimate loss per share of $0.89. The company ended Q2 with $1.2 billion in cash.

For the Q3, Lemonade anticipates revenue in the range of $32.5 million to $33.5 million, compared to the consensus estimate of $32.32 million. For the full-year 2021, the company expects revenue in the band of $123 million to $125 million, compared to the consensus estimate of $118.94 million.

Lemonade’s Corporate Updates

Lemonade says that it intends to prioritize investment in long-term growth over short-term profitability. For the upcoming car insurance product, the company said that the customer waitlist is growing rapidly.

Furthermore, Lemonade said that it is incorporating customers’ perspectives into the development of the product, with nearly 10,000 customers having shared their thoughts. The company has not set the launch date for the car insurance product, awaiting regulatory approvals.

Lemonade’s Risk Factors

The new TipRanks Risk Factors tool shows 75 risk factors for Lemonade. Since June 2021, the company has updated its risk profile to introduce one new risk factor under the Macro and Political category.

Lemonade tells investors that it has operations in Israel. It says that the country has been in conflict with terrorist groups Hamas and Hezbollah, along with Syrian-based military forces supported by Iran. Lemonade warns that the conflicts may escalate in the future, which could adversely affect its operations in Israel.

Finance and Corporate is Lemonade’s top risk category, accounting for 39% of the total risks. That is below the sector average of 58%. Lemonade’s shares have declined about 37% since the beginning of 2021.

Analysts’ Take

In August, Piper Sandler analyst Arvind Ramnani reiterated a Buy rating on Lemonade stock, but lowered his price target to $98 from $103. Ramnani’s new price target suggests 26.8% upside potential.

Consensus among analysts is a Moderate Buy, based on three Buys, one Hold, and one Sell. The average Lemonade price target of $91.20 implies 17% upside potential to current levels.