TARIK KIZILKAYA
Lemonade (NYSE:LMND) inventory bought a sorely wanted increase final week when co-founder and CEO Daniel Schreiber appeared on CNBC extolling the advantages of AI within the insurance coverage enterprise.
“Companies inside our sector that aren’t constructed on AI are lacking out on one of the vital forceful applied sciences round,” he mentioned in an interview late final Monday. “For us, it impacts all the pieces that we do. The entire firm was constructed upon it.”
Within the subsequent buying and selling session, the inventory jumped 8.8%. In the course of the holiday-shortened week, Lemonade (LMND) rose 13%.
AI helps the corporate make underwriting, advertising and marketing spend, and claims-processing selections. AI impacts all the pieces from threat administration, to the cost-to-serve, to the consumer expertise, Schreiber mentioned. “Each shopper who is available in has about 50 totally different machine-learning fashions analyzing and making predictions about ‘will they purchase, will they churn, will they cross-sell, will they declare’?”
Lemonade has grown its enterprise by 5x and gross revenue by 15x since its IPO 4 years in the past, he mentioned. Nevertheless, it has been robust going for the inventory. The inventory closed on Friday at $16.10, or 44% beneath its IPO worth of $29. Yr-to-date, the inventory has slipped 0.2%, lagging the S&P 500’s 15% climb and competitor Root’s (ROOT) fourfold improve and Hippo Holdings (HIPO) 76% achieve in the identical time interval.
“It is a enterprise that is actually driving on each metric — gross revenue, prime line, backside line, profitability, money stream — it is all inexperienced lights in every single place. The inventory market will discover that ultimately,” Schreiber mentioned within the interview.
The SA Quant system is not as bullish on Lemonade (LMND), assigning the corporate a Maintain score, the identical as Root (ROOT) and Progressive (PGR). By comparability, Hippo (HIPO) will get a Purchase score, and Allstate deserves a Robust Purchase.
Trying on the broader property & casualty insurance coverage sector, the SA Quant system charges HCI Group (HCI), the very best, adopted by Previous Republic Worldwide (ORI), Common Insurance coverage Holdings (UVE), and Allstate (ALL), all with Robust Buys.
