What Happened?

Shares of digital insurance provider Lemonade (NYSE: LMND) jumped 3.5% in the afternoon session after investors grew optimistic about its upcoming third-quarter earnings report, with sentiment also boosted by a broader market rally. The company was scheduled to report its results on November 5. Ahead of the announcement, reports indicated expectations for strong top-line growth. Estimates pointed to a potential revenue increase of between 35% and 38% compared to the same period in the previous year.

After the initial pop the shares cooled down to $61.64, up 2.6% from previous close.

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What Is The Market Telling Us

Lemonade’s shares are extremely volatile and have had 69 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 24 days ago when the stock dropped 5.1% on the news that investment firm Piper Sandler lowered its price target on the stock. The firm adjusted its target to $55.00 from a previous $60.00, reflecting a more cautious outlook on the company's near-term performance. This change indicated potential challenges that Lemonade might face. Despite the lower price target, Piper Sandler maintained its 'Neutral' rating on the shares.

Lemonade is up 69.4% since the beginning of the year, and at $61.64 per share, has set a new 52-week high. Investors who bought $1,000 worth of Lemonade’s shares 5 years ago would now be looking at an investment worth $1,055.

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