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Lemonade (New York Stock Exchange: LMND) The stock got a much-needed boost last week when co-founder and CEO Daniel Schreiber appeared on CNBC extolling the benefits of artificial intelligence in the insurance business.
“Businesses in our sector that do not rely on AI are missing out “It relies on one of the most powerful technologies currently available,” he said in an interview late last Monday. “For us, it impacts everything we do. The entire company is built on it,” he added.
In the next trading session, the stock jumped 8.8%. During the short holiday week, Lemonade (LMND) stock rose 13%.
AI helps the company make underwriting decisions, marketing spending, and claims processing. AI affects everything from risk management to cost of service to user experience, Schreiber said. “Every consumer that comes in has about 50 different machine learning models that analyze and make predictions about ‘Are they going to buy, are they going to produce, are they going to sell additional products, are they going to demand’?”
Lemonade has grown its business 5x and gross profit 15x since its initial public offering four years ago, he said. However, it’s been tough for the stock. The stock closed Friday at $16.10, or 44% below its IPO price of $29. Year to date, the stock is down 0.2%, lagging the S&P 500’s 15% rise, competitor Root’s (ROOT) four-fold increase, and Hippo Holdings’ (HIPO) gain of 76% in the same time period.
“This is a business that really relies on all the metrics — gross profit, bottom line, profitability, cash flow — all green lights everywhere. The stock market will notice that sooner or later,” Schreiber said in the interview.
The SA Quant system is not bullish on Lemonade (LMND), giving the company a Hold rating, like Root (ROOT) and Progressive (PGR). In comparison, Hippo (HIPO) gets a Buy rating, and Allstate is a Strong Buy.
Looking at the broader property and casualty insurance sector, SA Quant ranks HCI Group (HCI) the highest, followed by Old Republic International (ORI), Universal Insurance Holdings (UVE), and Allstate (ALL), all of which have operations Strong buy. .