After Year’s Best IPO, Lemonade Insider Selling Lockup Expiration May Pressure Stock

By Drew Singer | December 28, 2020

The best-performing listing of 2020 is poised to enter the new year with extra volatility after insider selling restrictions expire this week.

Insurance provider Lemonade Inc. is trading more than 350% above its July 1 initial public offering price, the best of any 2020 debut above $300 million, according to data compiled by Bloomberg. But roughly 44 million additional shares — mostly held by insiders — will be eligible for sale on Tuesday, according to the IPO prospectus.

The company’s shares have soared on the promise of its digital platform in carving out a niche for renters and homeowners, according to Bloomberg Intelligence research. In the past month, the stock has nearly doubled on gaining optimism the group will also be able to expand into new markets like pet and auto insurance.

Despite the acceleration over the past few weeks, Piper Sandler analyst Arvind Ramnani wrote in a note dated Dec. 15. that the firm remains positive “as the long-term opportunity for the company warrants an expanded multiple.”

Traders are bracing for volatility as affiliates — including all of the company’s directors and executive officers — hold more than 38 million shares subject to the lockup. That compares to 15.8 million shares available to trade as of Nov. 12, according to data compiled by Bloomberg. Of that, 24% are sold short, according to financial analytics firm S3 Partners.

This will be the second lockup expiration for the remaining two thirds of shares subject to the lockup agreement after the first expiry in November.

Top holders include SoftBank Group Corp. and Sequoia Capital Operations LLC.

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Latest Comments

  • January 4, 2021 at 3:29 pm
    Bill California says:
    A comment on the actual content of the article. Interesting to see the relatively large price decline the day before the lockup release but a rebound when pre-IPO shares (or t... read more
  • December 29, 2020 at 4:47 pm
    Savant says:
    Agreed that there is profitability challenges for all Insurance Risk Bearing entities in certain locations. FL and CA are tough writes currently for Homeowners. This impacts... read more
  • December 29, 2020 at 10:46 am
    Tiger88 says:
    My point is not that buying habits haven't or won't change, they absolutely will. My entire point is that no matter what the delivery system, insurance companies cannot handl... read more

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