Ought to buyers be enthusiastic about Lemonade auto insurance? – coloured idiot

lemonade& # 39; S (LMND 7.52% )The recent announcement that it would offer auto insurance in Illinois attracted a great deal of attention from existing and potential investors. What effects could this development have on the company's long-term growth story? In this section of Backstage Pass, recorded on November 3rd, Foolish contributors Trevor Jennewine and Brian Withers explain.

Trevor Jennewine: All right, let's take a look at this. It looks like there is another question from GodalGuru who says, "Lemonade announced an auto insurance program for Illinois today, and that got the stock up about 12% this morning. That's good news, but what are the long-term effects? "

Yes, Lemonade Car was launched in Illinois, and the company also said it will expand sales to other states in the near future. I'm a Lemonade shareholder – I'm not sure if any of you are – but I think this will have positive long-term effects on the company. It expands their market opportunities by about $ 300 billion, I'd like to say, management is quoted as saying.

Perhaps more importantly, many insurers are bundling products such as home insurance and auto insurance. That's one way to make the process easier. Lemonade couldn't do that before.

Management estimates that its existing customer base, consisting of products such as home insurance, renters, and pet insurance, is spending $ 1 billion on auto insurance, so I believe the cross-selling opportunities are substantial. As a shareholder, I am thrilled. Do any of you have an opinion on this?

Brian Withers: Yes, Trevor, I want to address that. I saw stocks go up today and wasn't really sure why. This makes perfect sense. This is what Lemonade shareholders have been waiting for. Management did not disclose a date as it was beyond their control. It was done, but they had to go from state to state. It could be any of the 50 states, but they have a state, and so they broke the glass ceiling there. There will be more to come, I'm sure of that.

This article represents the opinion of the author who may disagree with the "official" referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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