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5 Things You Should Know About Lemonade Stock (Growth Stocks) #lmnd stock - YouTube
Channel: Invest With Dr. Kash
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what's up everyone and welcome back to my channel聽
i hope you guys had a great weekend i know my聽聽
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weekend was fantastic i did my due diligence聽
on this new stock lemonade and today i'm gonna聽聽
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share with you five things that i found out about聽
lemonade that i think you should know if you're聽聽
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going to invest in this company or you're already聽
invested in it now before we get into the video聽聽
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and i discuss the five things my name is cash聽
this channel is all about investing with cash聽聽
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if you like my content hit that like button hit聽
that subscribe button now the first thing i want聽聽
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you to know about this company is what exactly is聽
their business model how do they attract customers聽聽
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what do they actually do which sectors are聽
they involved in the sector they're involved聽聽
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in right now is renters insurance and they have聽
already expanded to pet insurance as well as聽聽
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life insurance and another thing that you also聽
want to focus on is what exactly do they do how聽聽
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are they different from their competition so聽
the lemonade is actually a renter's insurance聽聽
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company and they have expanded themselves to聽
the pet insurance as well as life insurance聽聽
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the ceo specifically mentions how trust is the聽
most important aspect for this company the way聽聽
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they do this is very simple when a customer pays聽
premium to them they have a standard collecting聽聽
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fee that they just take out from the premium the聽
way traditional insurance companies work is very聽聽
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different because traditional insurance companies聽
get paid after they have already paid for the聽聽
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claims so it's in their best interest to not pay聽
for the claim versus lemonade their business model聽聽
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is really good because they take out a flat fee聽
and then they pay off for claims and whatever聽聽
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remains they donated for the charity for customers聽
cause one of the things i want to point out about聽聽
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lemonade is that they appeal a lot to millennials聽
it takes about 90 seconds to get insured and about聽聽
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three minutes to get paid usually insurances聽
take quite a long time to process and get聽聽
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the claims paid off and things like that while聽
lemonade has made it very simple for its users聽聽
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second their costs are really really cheap so聽
let's actually talk a little bit about what聽聽
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businesses lemonade is involved in as i mentioned聽
they're involved in the renter's business they're聽聽
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involved in the homeowners they're involved in the聽
term life and pet insurance let's look at their聽聽
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prices so they're actually quite cheap compared to聽
a lot of competition which i'll be talking about聽聽
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in a bit but you can see that the renter's price聽
is actually five dollars a month or starting from聽聽
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five dollars a month home insurance is 25 a month聽
term life is nine dollars a month at pet insurance聽聽
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that's ten dollars a month they're actually聽
pretty fast at acquiring customers in the last聽聽
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20 20 years they've reached 1 million customers聽
which is pretty insane for an insurance company聽聽
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that is in such an infancy stage that is one of聽
the coolest things about lemonade is that they聽聽
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are able to attract customers at a much faster聽
rate now i've said a lot of things about the聽聽
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company's business model how they're attracting聽
customers how they're actually processing claims聽聽
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how they're distributing themselves in the market聽
but the second thing you also want to focus on聽聽
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focus on is what are their financials what are聽
their numbers what do they look like because that聽聽
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is very key when it comes to understanding whether聽
this is the right business for you to invest in or聽聽
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whether there are some things that you want to be聽
careful about so now let's take a look into the聽聽
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financials for the company so this is actually聽
lemonade's income statement and looking from聽聽
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december 2017 to all the way to december 2020聽
you can see this is all in millions by the way聽聽
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so the revenue in december 2017 was 2.4 million聽
it went to 22.5 million in 2018 in 2019 it went聽聽
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to 67.3 million which is quite an impressive jump聽
more than 3x which is nice and in december 2020聽聽
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revenue was 94.4 million of course the jump聽
from 2018 to 2019 was a lot bigger than from聽聽
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2019 to 2020 however the revenue still did go up聽
now let's take a look at the operating expenses聽聽
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and the income which is another thing i like聽
to look at if i'm assessing the finances for a聽聽
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company so the operating expenses in december聽
2020 it was 30.4 million and 2019 it went to聽聽
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about 175 million and in december it ended up聽
so you can see the operating expenses in 2017聽聽
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these numbers are i think bits shifted in 2017聽
it was 30.4 million in 2018 it was 75.1 million聽聽
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in 2019 it was 175 so that's a lot of expense聽
jump right here that's over 100 million so that's聽聽
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definitely something to consider so from 2019聽
going into 2020 this jump was not that much聽聽
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however the operating income also went up so聽
the idea is that the revenue is going up however聽聽
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the expenses are also going up and the expenses聽
are more than the revenue so this is one of the聽聽
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things i think investors should understand that聽
the company is not profitable as of right now but聽聽
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the price of the stock is actually factoring in a聽
lot of growth this graph actually shows the price聽聽
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to sales ratio for lemonade and it's actually聽
47 or 46.17 times you should be looking at the聽聽
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whole picture you should not just be looking at聽
the price of sales ratio and decide whether the聽聽
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company is worth investing in or not investing聽
and you should be looking at the full picture聽聽
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and the full story but with that being said this聽
is one of the things i do look at for this company聽聽
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and the price of the stock is actually 46.17 times聽
its sales that means the stock is trading at 46聽聽
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times its actual sales which is pretty nuts now聽
some other things i also want to discuss from聽聽
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this income statement is their earnings per share聽
so you can see that in the 2017 their earnings per聽聽
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share was 2.58 it went to 4.84 cents in 2018.聽
in 2019 it went to 9.75 cents this makes sense聽聽
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because the revenue almost more than tripled聽
so their earnings per share was huge but then聽聽
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it declined to 3.63 and now it's again still聽
the same it would be really interesting to see聽聽
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their earnings next week and kind of take a look聽
at these numbers and see where the company stands聽聽
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right now and that would be a huge catalyst i聽
would definitely want to be checking out the聽聽
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stock and closely monitoring it to see how it's聽
moving and how the company is performing now this聽聽
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is something else i also want to be talking about聽
so these are the financial statements again but聽聽
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this is the balance sheet for lemonade and one聽
of the things i want to point out is their total聽聽
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assets so this is something else that i do look at聽
as to whether the company has a lot of debt or not聽聽
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or are they accumulating a lot of debt or not so聽
let's take a look at this if they're total assets聽聽
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if you look so from 2017 all the way to 2020 they聽
found that their total assets have continuously聽聽
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gone up and right now they're at 828.7 million聽
in total assets but you also want to look at the聽聽
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liabilities of the company and the liabilities聽
have been going up however they're a lot lower聽聽
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so let's take a look at the total assets it's 828聽
million the liability is 287 so if the company聽聽
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was to let's say sell off all its assets and all聽
this liability it is still actually in has a lot聽聽
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of money so they're not bankrupt pretty much so聽
they're going to be in the market and also look聽聽
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at their cash equivalents they have about 570.8聽
million company does have money and they're not聽聽
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going to be going anywhere anytime soon the third聽
thing that i find interesting about lemonade is聽聽
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their expansion into the car industry recently the聽
news came out that the company is trying to get聽聽
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itself into the car insurance industry which is聽
actually 70 times more than the renters as well as聽聽
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pet insurance and there's a lot of big competition聽
for lemonade standing out there there's geico聽聽
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there's allstate there's state farm but the ceo is聽
actually taking a big jump and going into the car聽聽
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industry and putting themselves out there in聽
the competition so that's going to be really聽聽
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interesting to see because their focus is that聽
they want to attract customers then they want to聽聽
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bundle up their options so that they can benefit聽
the most as well as the customers can benefit for聽聽
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the most that is going to be one of the really聽
important catalysts that i would be keeping in聽聽
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back of my mind now the fourth thing i want to聽
talk about is the cash that lemonade already has聽聽
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now the company has a lot of cash as i also聽
mentioned since they have so much cash they're聽聽
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going to be around in the market for a long time聽
however the big thing you also want to be careful聽聽
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about is are they just burning through the cash聽
or what exactly are they doing with that cash聽聽
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are they spending on expansion are they spending聽
on marketing are they saving the cash the company聽聽
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is not generating any profits they're in loss聽
right now so if that's the case you do want to be聽聽
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thinking about whether you're investing in this聽
company for really really long term or are you聽聽
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investing in it for like a couple of years and you聽
think that the company is really going to disrupt聽聽
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the market for insurance and actually figure out聽
a way to to keep their business model sustainable聽聽
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for a long time then it makes sense to actually聽
invest in a long term maybe five years maybe 10聽聽
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years so the fifth and the final reason is as聽
an investor what are some things you should be聽聽
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looking into for the company if you're in it for聽
the long term so one of the things that i already聽聽
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mentioned is i would want to see some sort of聽
revenue progression as well as expenses going聽聽
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down the revenue projections have been pretty聽
good so far so i would want to continuously see聽聽
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that because they're trying to disrupt other聽
insurance agency markets second is how sustainable聽聽
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is their business model in other areas because聽
right now the market share for lemonade in the聽聽
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insurance especially the renters and the life聽
insurance it is very small percentage compared to聽聽
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big players like state farm and all-state lemonade聽
has a market share of 1.6 percent compared to聽聽
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state foreign which has about 16 percent and聽
with that being said if it's 1.6 percent they聽聽
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don't really have a lot of share their market cap聽
is 5.1 billion right now and if they can even get聽聽
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to about five percent of their market share that's聽
actually quite good because that's three times聽聽
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their market caps and right now the company's聽
valuation is 5 billion so if they're able to聽聽
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get to 15 billion that's actually quite good i聽
mean in car insurance they haven't even entered聽聽
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and they're going to enter in june so their market聽
share is 0 and when they do enter it's going to聽聽
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determine as to how much of a market they're able聽
to get it is 70 times more in terms of the total聽聽
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industry compared to like home insurance or pet聽
insurance but is lemonade really going to be able聽聽
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to take over that's something that you have to聽
ask yourself whether you believe in the company聽聽
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to take over in the car insurance or not third聽
thing is i would continuously want the company聽聽
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to keep attracting more and more customers that's聽
something else i would want to see at a rate that聽聽
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they're already going at and i wouldn't want聽
them to slow down that's another thing i think聽聽
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you should be monitoring for this company as an聽
investor or if you're just a speculative person so聽聽
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those are five things that i think are interesting聽
about lemonade or some things that you want to be聽聽
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careful about if you're invested in the company聽
let me know in the comment section down below聽聽
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as to what you think about lemonade i'll link the聽
sources down below as to what i use to go over the聽聽
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financial statements and some due diligence that聽
i did on my own hopefully that helps you you can聽聽
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definitely read it on your own time hope you guys聽
find this content entertaining and informative聽聽
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if you have any questions leave it in the聽
comment section down below again my name is cash聽聽
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this channel is all about investing with cash聽
if you like my content hit that like button hit聽聽
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that subscribe button hit the notification聽
bell and stay tuned for the next video
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