Should you BUY $LMND? | A complete analysis of Lemonade stock!

Should you buy LMND? This video goes through a complete analysis of Lemonade ($LMND) stock, to understand how it will attempt to disrupt the insurance industry, and how much value it could be worth in the long-run!

The stock went public on July 2nd, 2020 at a price of $29 per share, but skyrocketed to over $69 on its first day alone, to set a record for the highest gain of any American 2020 IPO.

Lemonde is a relatively young company, having only been established in 2015, within the insurance space (specifically the Property & Casualty segment), looking to use a cominbation of artificial intelligence, behavioral economics and big data to automate both the underwriting and claims processes that have historical required hundreds if not thousands of employees. Lemonade in fact, is attempting to do all of this with four artificial entities including two chatbots - AI Maya, AI Jim, CX.AI and Forensic Graph.

Insurance is an extremely broad industry with many sub segments, and according to the Insurance Information Institute, companies in the US alone wrote more than 1.2 trillion in policies in 2018 with a roughly even split between Property and Life. While it is competing directly with companies such as State Farm and Allstate, it is in fact very different in its approach to these legacy and established players.

Lemonade is also looking to expand its operations overseas to capitalise on the global markets, and has already done so in Germany and the Netherlands for example. The assumption is that once it has saturated its currently targeted segments in both the US and the aforementioned European countries, it will expand its offerings to include other areas such as business, travel and car insurance for example, and potentially even health & life insurance in the long-run.

In this video, we also take a look at its Income Statements from the last couple of years, its Balance Sheet and also take a quick glance at its Financial Ratios, to understand its current valuation and if there is currently a suitable entry point to BUY the stock.

We also touch on a few other topics - such as its $300 million backing from Japan's Softbank as part of the Vision Fund, the emergence of AI as a force not to be reckoned with and also a rising, fellow disruptor in Hippo, founded by Assaf Wand, and the downgrade of Lemonade by Goldman Sachs analyst Heath Terry on Monday July 27th, when he initiated coverage on Lemonade and immediately issued a Sell rating. His reasons for the Sell rating were related to the astronomical valuation concerns as covered in this video, and he expects about five years of operating losses before breaking even plus the company's probable need for a significant injection of additional capital in the future in order to stay afloat.

While most might immediately conclude that Lemonade and Hippo will jockey for position in the specific niche they find themselves, and diminish each other's prospects, it is important to realise that they are both out to DISRUPT the legacy trillion dollar insurance market with all of its aging players. The insurance industry is so large, that there is more than enough room for two or even multiple significant players, such as what is already happening now today, and it wouldn't be surprising to see both disruptors thriving over the next decade.

Ultimately, this video aims to provide greater detail surrounding the fundamentals of Lemonade (LMND) and whether or not the stock is worthy of a BUY given it has already run up so much since its IPO.

Timestamps
0:00 Intro
0:41 Lemonade goes public
1:26 What does Lemonade do?
3:34 90 seconds to register, 3 minutes to get paid
4:24 A look at the Lemonade phone app
5:57 The Customer Cortex
7:03 The Total Addressable Market of the Insurance industry
7:55 The size of the Property & Casualty market in the US is rising
8:30 The US accounts for less than 50 percent of global P&C premiums
9:26 Lemonade's Income Statements for 2018 and 2019
10:18 Lemonade's Income Statement for Q1 2020
10:47 Lemonade's Balance Sheet
11:14 Lemonade's Financial Ratios
12:08 State Farm attacks Lemonade
12:48 Lemonade's declining Loss Ratio
15:09 Humans can no longer compete with Chess AIs
16:07 Hippo vs Lemonade
17:50 Final thoughts on LMND stock
18:31 Softbank as a backer to Lemonade
19:01 A look at the LMND price chart
20:20 Outro

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#Investing #Stocks #LMND $LMND #Lemonade #Growth #Analysis #Portfolio #StockMarket #RobinhoodApp #RobinHoodInvesting #Webull

[InnovativeInvestmentIdeas]

Post your questions and thoughts about LMND down below! Don't forget to subscribe to the channel and like the video if you found it useful and/or enjoyable as well, as your SUPPORT will be greatly appreciated :D~

[JessieOpportunityCostInvesting]

This is a legit complete analysis and exactly what I needed! Definitely subscribing for more, see you around 😎

[talkofthestage]

I really like how detailed and well researched this is - for a topic I don’t know too much about I’ve learnt a lot through this video. Thanks!

[juniorbash]

Yes you ACTUALLY did it. Lemonade is likely going to be one of those generational companies of this decade. With first mover advantage, excellent marketing, and savvy founders it has the momentum. Especially when it comes to making a business successful, timing has been proven to be more important than the idea itself. Given the current economic times and effects from the global pandemic, it will prove to tailwind for this company.
In a similar case, ask yourself BYND (Beyond Meat) or IMPF (Impossible Foods) who would rather invest in should you get the chance? Both are in the faux food industry; both are targeting a trillion industry battling huge legacy players.
The answer is the company with the better execution and management. In both cases, it’s Lemonade (LMND) and Beyond Meat (BYND) respectively.
Long LMND 🍋.

[MetalBum]

Tech AI and insurance. It seems like great stock

[michandcat]

Impressive analysis. New subscriber. Keep up the good work! Looking forward to a potential followup down the line. Best wishes.

[adamproceviat]

Great analysis man! I’m holding this one long term for sure. Defs should be a disrupter in an old industry. Will keep buying small amounts on each dip

[janfm]

Amazing summary and thinking around lmnd. I see a moat in their technology even compared to other insur tech companies. Already in 2018 you find a clear vision to execute. More undecided competitors will struggle to keep up imo. Btw I just found your channel by searching for lmnd coverage since others only talk about the exciting idea of lemonade but don't ask further questions. So looking forward to hearing more reflections on them. Greetings from Germany

[XReddevilsX]

The most extensive analysis of lemonade. Didn't know they have a competitior as it's wasn't mentioned in any other analysis video.. I'm vested at $71 and holding for long term.

Does hippo operate the same way? Giving 75% to Charity?

[mikij]

Do you recommend to buy now at 56.86 or do you think it’s better to wait. I have heard in December it may reach 20-30? What do you think?

[MetalBum]

How about now that it’s so cheap $55-65 per share. Seems cheap no???

[ecjjox]

Thank you for one of the most extensive Lemonade video, subscirbed!

Would like to know your thoughts on their business model on keeping 25% of premiums and reinsuring 75%, does this mean that their gross margins would be around 25% at best?

Any idea on why their GnA expense for Q1 2020 is almost similar to that of FY 2019? Is it due to increase cost from being a listed company?

[madeiracake]

it's a very erratic stock that i would stay away from.

[mikesmith]

Lemonade is not sitting on a winning concept... what you fail to appreciate is the complex nature of insurance. Sophisticated consumers do not trade protecting their largest assets for the ease of buying insurance from a NY based bot on their Iphone. This is why 90% or more of Lemonade's customers are millennials buying renters policies. Lemonade reported their average sale per customer was around $190. The average homeowner's policy is the US is $1200. When the next hurricane hits the East coast it's unlikely a bot will simply settle claims as Lemonade markets will happen. It's telling that bullish investors don't insure their home and cars with lemonade nor do they have the app on their phone and they've never obtained a quote. Shouldn't you try/own the product that you're so bullish on? Wake up.. just because it's tech and has AI it's not the next Tesla. If you must buy wait a few weeks and buy it below $30.