MILE - Is Lemonade Stock a Buy?
Lemonade 's (NYSE: LMND) stock dipped 5% in after-hours trading Monday after the online insurer posted its third-quarter earnings and announced its plans to buy Metromile (NASDAQ: MILE) , a digitally native provider of pay-per-mile auto insurance, for $500 million in stock.
In the quarter, Lemonade's revenue rose by 101% year over year to $35.7 million, beating estimates by $2.3 million. Its net loss widened from $30.9 million to $66.4 million, or $1.08 per share, but still cleared expectations by $0.08 a share.
The headline numbers look decent, but the planned purchase of Metromile -- which would allow it to accelerate the rollout of its new auto insurance service -- seemed to worry investors. Metromile is still deeply unprofitable, and the all-stock deal will dilute the value of Lemonade's existing shares, which are already pricey, trading at a valuation of more than 20 times next year's expected sales.
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Is Lemonade Stock a Buy?