Thursday's Headlines: A Bitter Quarter For Lemonade

Thursday's Headlines: A Bitter Quarter For Lemonade

Morning folks! Did anyone get yesterday’s puzzle? The answer was Supply Chain.

See if you can figure out today’s puzzle, and let us know on Twitter @MyWallStHQ if you think you’ve got it.

Unveils Vintage

Hint: An investment approach pioneered by Benjamin Graham

We’ll reveal the answer in tomorrow’s headlines.

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

DraftKings (DKNG) +5.6%

Chegg (CHGG) +3.9%

MercadoLibre (MELI) +3.7%

Baozun (BZUN) +1.6%

Casey's (CASY) +0.8%

Moving Down ⬇️

Redfin (RDFN) -9.8%

Smartsheet (SMAR) -9.3%

Airbnb (ABNB) -9.2% (BILL) -7.3%

Tesla Motors (TSLA) -7.0%

1. Lemonade (LMND) reported Q4 earnings last night with weaker guidance and more losses expected throughout 2022. Despite adding 80,000 new customers since Q3 2021, wider losses have sent shares spiraling. Revenue increased 100% YoY to $41 million, but losses also more than doubled from $22 million in the same quarter last year to $51 million this year. A higher than expected loss ratio of 96% from 73% in the year prior has been attributable to the rollout of new products in pet and home segments. With all that being said, Lemonade is positioned reasonably well with $270 million in cash, and another $802 million tied up in long and short-term investments. Lemonade Car was launched in the quarter, with its acquisition of Metromile set to follow, and it has already seen the benefits of cross-selling among its existing base. Get the full earnings release here.

2. Russia’s reported invasion of Ukraine has sent U.S. stock futures down across the board. Although gloom surrounds us, U.S. markets are better positioned than European counterparts. The outlook is far worse there given its ties to Russia for the supply of oil. Besides oil, Ukraine and Russia have also been key suppliers of semiconductors components for many global firms. This could dampen the outlook for some U.S. businesses that were expecting issues to ease over the coming months, and it could get worse before it gets better. General fear and uncertainty shadow the markets now, which often correlate with consumer spending and have knock-on effects on economies, but it’s important for long-term investors to maintain a steady hand despite current conditions. Read the full update here.

3. Cloudflare (NET) is acquiring Area 1 Security in a deal valued at $162 million. The deal will be paid partially in stock and partially in cash, estimated to be roughly a 50/50 split between the two. Area 1 is a cloud-native platform that prevents phishing attacks by email and other cybersecurity threats before they can inflict damage on corporate entities. Email security breaches are estimated to cause 90% of all cybersecurity threats and the company’s services play a role for organizations but also for the protection of consumers — 2020 statistics show 76 million households and 7 million businesses were affected, with threats rising — which accounted to roughly $1.8 billion in losses. CEO Matthew Prince commented on the deal saying “we expect we’ll be delivering the fastest, most effective, and most reliable email security on the market.” Read the full press release here.

Some more earnings from last night:

Holiday specialist, Booking Holdings (BKNG), surprised investors last night with fourth-quarter net income of $618 million, or $14.94 per share, far surpassing estimates. Shares fell after-hours, however, following a warning from CEO Glen Foge: “We do expect there will still be periods where COVID negatively impacts travel trends as we move through the year.” Read more here.

A quarter to forget for TrueCar (TRUE), which reported disappointing revenue of $45.9 million, down 28.3% YoY, leading to a net loss of $15.8 million. Some executive level reshuffling though as Chief Financial Officer, Jantoon Reigersman, was also appointed Chief Operating Officer, effective March 1, 2022. Read more here.

IMAX (IMAX) is back to its pre-pandemic self it seems after reporting a profit of $0.17 a share compared with a year-ago loss of $0.36 a share, on revenue of $108.6 million — up 94% YoY. It was IMAX’s best quarter since 2019, and it took in 3% of overall 2021 global box office tickets, marking a new record for the company. Read more here.

Shares in Evolent Health (EVH) are soaring pre-market after the healthcare company reported a better-than-expected loss-per-share of $0.06, while revenue topped consensus estimates at $248.4 million. Investors were most excited about estimated revenue growth for the year of around 27%, between $1.12 billion and $1.18 billion. Read more here.

There are seven companies on the MyWallSt shortlist that will report earnings today:

Planet Fitness (PLNT)
Block (SQ)
Etsy (ETSY)
American Tower (AMT)
Intuit (INTU)
Autodesk (ADSK)
Monster Energy (MNST)

Get this week’s full earnings calendar here. 


David GranahanDavid Granahan