InsurTech Lemonade has started trading after a much anticipated initial public offering (IPO) and the debut has so far proven a hit.
Right up until the end it was unclear just how the company’s shares would be priced, with initial reports placing it between $23 to $28 per share. Then more reports suggested that range might be more like $26 to $28 per share, before Lemonade reportedly said that the IPO would open with a $29 per share.
And when the stock opened on Wednesday it did indeed trade at $29 per share. However, during the day the price skyrocketed to $50.06, a jump of over 138%. This saw Lemonade reach a $3bn market cap in its first day of trading, CNBC reported.
Lemonade was launched in 2016. The InsurTech company speed up the insurance signup service considerably through the use of artificial intelligence and chatbots.
The news could calm some of the InsurTech industry stakeholders that have been watching Lemonade’s IPO with great interest. While many other sectors have adopted new technological solutions to speed up their offerings, the insurance industry has been famously slow to digitise their services.
The idea from these stakeholders is that Covid-19 could act as the spark for insurers adopting more technological solutions as the pandemic has demonstrated the limitations of traditional services and structures in the industry, particularly when it comes to risk management. While no one is expecting that the startups in the sector won’t leave this trialling period unscathed, the InsurTech industry overall could come out on the other side of the pandemic stronger than what it was before. For the people making this argument Lemonade’s IPO was be the first test for how much weight the idea carried.
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