Lemonade, the online insurer, surges in Wall Street debut
Posted July 2, 2020 1:07 p.m. EDT
CNN — Lemonade was just what investors wanted right before the long July 4th weekend. Shares of the online insurer backed by SoftBank, surged in their market debut.
Lemonade priced its initial public offering at $29 a share and quickly more than doubled to about $62 a share in early trading Thursday. The company raised nearly $320 million from the stock sale.
The successful IPO is a big win for SoftBank, the Japanese conglomerate that has been stung by the big drop in the value of investments like Uber, the now bankrupt OneWeb and struggling privately held unicorn WeWork.
Masa Son's SoftBank owns a 21.8% stake in Lemonade following the stock sale. The company is now worth about $3.5 billion based on Thursday's stock price. That's up from a valuation of about $2 billion last year, according to data from CB Insights.
That could help soften some of the financial pain for SoftBank, which recently announced plans to sell off nearly 200 million shares of T-Mobile for about $21 billion in order to raise cash and pay down debt.
Venture capital firms Sequoia, Aleph, XL Innovate and General Catalyst all have notable stakes in Lemonade as well.
Lemonade uses artificial intelligence to help consumers get homeowners or renters insurance. The company says people can get insured after a two-minute chat with a bot named AI Maya, who typically asks about 13 questions.
Another bot, dubbed AI Jim, helps pay claims in as quickly as three months.
Lemonade said it now has more than 729,000 customers and that 70% of them are under the age of 35. The company's revenue more than doubled in the first quarter of 2020 to $26.2 million. But Lemonade is not profitable and losses ballooned from $21.6 million a year ago to $36.5 million.
The company's strong debut continues a string of successful new stock offerings on Wall Street.
Private equity backed companies like financial data firm Dun & Bradstreet, supermarket chain Albertsons and record label Warner Music Group have recently gone public, along with buzzy tech firms like Vroom and ZoomInfo and several biotechs.
Dun & Bradstreet president Stephen Daffron said in an interview with CNN Business after the IPO that the company was an "iconic brand tarnished by slow growth."
But the company's new owners have cut costs and focused more on technology, allowing Dun & Bradstreet to take advantage of investor appetite for newly listed stocks.