Lemonade drops 11% after notorious short-seller says the stock should trade 43% below current levels
- Lemonade stock fell as much as 11% on Thursday after a negative tweet from notorious short-seller Citron Research.
- The online-insurance platform has outpaced the market considerably since its July IPO with shares up more than 130%.
- Lemonade stock boasts a market cap in excess of $9 billion and trades at almost 100-times sales.
Lemonade's stock dropped as much as 11% on Thursday after Andrew Left's notorious short-selling fund, Citron Research, predicted the online-insurance platform will fall back to $100.
Founded by Daniel Schreiber and Shai Wininger, Lemonade operates an online insurance platform that uses AI chatbots to help service customers.
Lemonade finished Wednesday at $176.64 per share, meaning that a decline to $100 would be a 43% loss.
Of course, that hasn't been the case very often of late, as short-sellers have struggled over the past few years. Misses on big bets on Tesla, Moderna, and others have cost short-bias funds billions.
In fact, short-biased funds lost over 47% through November 2020 alone, according to the HFRX Equity Hedge: Short Bias Index.
Citron acknowledged the poor performance of short-sellers over the past few years but still declared the fund would be ripping "management a new one."
Lemonade was one of the most successful IPOs of 2020, and its run has continued into the new year. Shares are up over 130% since the stock's first day of trading last July.
Citron's bearish news comes just one day after Lemonade announced it will upsize its primary public share offering from 3 million shares to 3.3 million.
Priced at $164 per share, the company now expects to raise nearly $545 million from the move.
Lemonade now boasts a market cap north of $9 billion. A staggering number for a company that posted revenue of just $65 million for the nine months that ended on Sept. 30 while losing $3.41 per share.
Still, bulls argue the impressive revenue growth and revolutionary AI-based online insurance platform will allow Lemonade to thrive going forward.
Lemonade currently has two buy ratings, two sell ratings, and five hold ratings from analysts, while the stock trades at nearly 100-times sales.