US insurtech Lemonade beats expectations on day of IPO listing

Lemonade is only the second public benefit corporation to be traded on the NYSE ever.

Earlier this month, US insurtech Lemonade filed for an initial public offering (IPO) and yesterday evening it made its debut on the New York Stock Exchange (NYSE). 

Shai Winniger, President of Lemonade, rang the bell at the NYSE yesterday evening and shortly afterwards shares in the fintech were trading at around $53, considerably higher than the $29 estimation. 

Following the initial jump, shares in the company continued upward with the highest price per share sitting at $70.80, more than double the IPO price. 

And if the jump in price wasn’t enough to highlight the popularity of Lemonade, within the first half an hour nearly 5.5m shares had been traded. 

The fintech chose to go down the IPO route in the hopes of raising at least $100m in addition to the $300m it recently raised with the help of SoftBank. 

SoftBank valued the fintech at around $2.1bn, although before the IPO Lemonade was valued at $1.6bn, current estimates put the fintech at around $3.9bn. 

Since 2015, Lemonade has been on a mission to digitise insurance, and unlike many of its rivals, built a fully licenced home insurance product, rather than building a marketplace or reselling other insurance products. 

Today the startup operates across the US, focusing on homeowners and renters, and keeps a flat 25 per cent fee from customers’ premiums while using the remaining to pay claims and donate to charity as part of its annual Giveback programme. 

In the company’s IPO prospectus, the fintech said it was “rebuilding insurance from the ground up on a digital substrate and an innovative business model.” 

The success of Lemonade’s IPO is still too early to gauge; however, the initial response is a vote of confidence in both insurtech and the wider fintech ecosystem, and a signal that we could see even more IPOs in the wake of coronavirus.