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Why Is Lemonade Purchasing Metromile For $500 Million In Supply?

November 9, 2021

Love ‘em, despise ‘em, or never ever come across ‘em; Lemonade (NYSE: LMND) is making huge proceed Wall surface Road now as it explores insurance coverage innovation, or ‘insuretech’. 

This is ideal summed up in its just-announced procurement of Metromile (NASDAQ: MILE) last evening, however what does this mean for organization?


    Life’s offering Lemonade extra lemons… 

    Prior to we reach Lemonade’s huge acquiring information, allow’s have a look at its Q3 record last evening also: 

    • Profits leapt 101% year-over-year (YoY) to $35.7 million.
    • Client matter leapt 45% YoY to 1,363,754. 
    • Bottom line likewise raised to $1.08 per share from $0.57 a year ago because of financial investments in advertising and marketing as well as development. 

    Overall, not the most awful quarter for a firm that has actually had a rough 2021, to state the least — its share cost is down about 40% year-to-date (YTD). So, where does the Metromile procurement suit? 

    The all-stock offer worths Metromile at about $500 million, as well as investors will certainly obtain one Lemonade usual share for each 19 Metromile shares. It likewise suits quite well with Lemonade’s brand-new sector, Lemonade Cars, which was released simply recently. 

    Metromile deals pay-per-mile auto insurance coverage, accredits an electronic insurance coverage system to insurance provider worldwide, as well as supplies an electronically indigenous offering including wise driving functions, automated insurance claims, as well as lorry info. Lemonade’s very own information as well as AI-driven insurance coverage organization version will certainly currently obtain a cornucopia of individual information, offered Metromile’s licensing throughout 49 U.S. states. 

    Unexpectedly, Lemonade is no more a novice in the data-driven auto insurance coverage room, however “at the lead” — the firm’s words, not mine. As well as I have a tendency to concur that this is a wise procurement. Metromile has actually been taken into consideration significantly underestimated by bulls, hence the procurement cost was great, as well as both port in well with each other to develop a solid, AI-driven insurance coverage version. 

    The offer is readied to be finished at some point in Q2 2022.

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