Lemonade Inc. made the strongest initial public offering debut of a US company in 2020, as the shares of the mobile-based insurance company more than doubled last on its first day of trading.
LMND Lemonade,
The shares, which soared as much as 144% to hit an intraday high of $ 70.80, finished 139% at $ 69.41 on Thursday, following a listing price of $ 29 a share on Wednesday night. That price was above an already increased IPO price to a range of $ 26 to $ 28 a share, which exceeded a previous range of $ 23 to $ 26 each.
That’s the best debut for a US-based company From the shares of Inari Medical Inc. NARI,
closed at $ 42.51 on May 22, above its $ 19 price for a 124% gain. US deposit receipts from Shanghai-based video interaction company Agora Inc. performed slightly better than Lemonade, rising 152% on its first day to close at $ 50.50.
Most recently, the shares of online used car salesman Vroom Inc. VRM,
closed at $ 47.90 on June 9 the day after setting its IPO at $ 22, for a 117% increase, and ZoomInfo Technologies Inc. ZI,
The shares closed at $ 34 on June 4, its first trading day, after hitting an intraday high of $ 42 after trading at $ 21.
Lemonade sold 11 million shares, with up to 1.7 million available to subscribers to cover general allocations. Taking those additional actions into account, Thursday’s close values the company at $ 3.93 billion.
Prior to the IPO, the company had already raised $ 480 million through multiple rounds of funding, according to Crunchbase, with a $ 300 million round in April 2019 led by SoftBank Group Corp. 9984,
giving a “pre-money” valuation of $ 1.7 billion.
Read: Lemonade IPO: 5 Things You Should Know About Online Insurer
While investors joined the IPO, the offering is not without skepticism. Hugh Tallents, senior partner at consultancy cg42, said the action is not a long-term move.
“The company has well-designed materials that are attracting initial investors and capturing inexperienced Robinhood merchants who don’t know how to look beyond Lemonade’s positioning as a technology company and underwriting business,” Tallents said in email comments. “Today’s increase will likely be followed by an equally substantial hit.”
While Lemonade notes that it competes against the likes of Allstate Corp. ALL,
and Travelers Cos. TRV,
Tallents said it is easier for large companies to reproduce the Lemonade approach than it is for Lemonade to scale to their level.
“Ultimately, Lemonade is just another unprofitable financial technology company, backed by artificial intelligence, with no product advantage or value proposition,” said Tallents.
For the year, the Renaissance IPO ETF IPO,
It was up 33%, while the S&P 500 SPX index,
is down 3% and the Nasdaq COMP COMPENSATED index in technology,
It was up 14%.
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