Lemonade
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Short interest fell in InsurTechs, but not enough to ease the pressure on the sector. -
The deal derisks its early auto build-out, likely delays its next capital raise and still stands a good chance of delivering InsurTech alchemy.
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Lemonade expects that Metromile will be a key to run faster through a competitive auto insurance market while assuming fewer risks on the road.
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InsurTech shares trade mixed in response to Lemonade-Metromile combination.
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Lemonade CEO Daniel Schreiber told analysts that the Metromile acquisition will put the InsurTech “at the vanguard of car insurance”.
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Lemonade’s acquisition of Metromile helps both firms redirect focus from ongoing challenges.
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Lemonade will acquire Metromile in an all-stock transaction that implies a fully diluted equity value of approximately $500mn.
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The personal auto product enables customers to bundle car insurance with home, pet and life policies.
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Root and Lemonade remain the highest-shorted stocks covered, as short interest in most firms remains flat in anticipation of earnings.
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The private equity-backed retail brokers have lessons to teach the sector’s tech start-ups.
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Without any major catalysts, the short interest for the industry was muted, with movement centering around InsurTechs once again.
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Pressure on Root cools following stock price dips, but persistent short interest in InsurTechs suggests that prices haven’t bottomed out yet.
